Università Di Padova

Università di Padova, Facoltà di Economia Introductory Econometrics 15th December 2010 Exercise 1

After increasing sharply from 2006 to 2009, the number of undernourished people in the world is estimated to have declined in 2010 as the global economy recovers (Figure 1). Developing countries account for 98% of the world’s undernourished people and have a prevalence of undernourishment of 16% (Figure 2).

Amongst the least developed countries, international comparisons consistently singled out Tajikistan as one of the countries with the worst indicators of food insecurity and child malnutrition in the Central Asia region. Despite Tajikistan’s recent achievements in economic growth and poverty reduction, food and nutrition insecurity remains an issue of policy concern. In particular, it remains unknown how expenditure is allocated within the household, that is if the most food insecure in the household are children or adult members. The aim of this exam is to look further into this issue. A sample of households representative of the Tajikistan population is available to this end. Let w be the monthly caloric intake for children in the household, which is defined as the ratio between the caloric intake given to children and the total caloric intake of the household. Let x be logged per-capita income (i.e. disposable family income divided by the number of household members), and define: = log − log = , and + + + + ,

where

being prices for food related and non-food related items,

respectively.

1. After having interpreted the parameter an estimate of

, assume that

is measured at the country level. Clarify if

could be retrieved from the regression (use 5-7 lines at the most).

2. Use data in the file reg15dec2010.* to estimate the regression model, and test for the significance of income effects on w (use 5-7 lines at the most). 3. Use regression results to predict the value of w for the median household in the sample when = , and derive the...