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In Problem 11 in Chapter 4, the R-squared from estimating the model log(salary) = β0 + β1 log(sales) + β2 log(mktval) + β3profmarg+ β4ceoten + β5comten + u, using the data in CEOSAL2.CSV, was R2 = .353
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In Problem 11 in Chapter 4, the R-squared from estimating the model log(salary) = β0 + β1 log(sales) + β2 log(mktval) + β3profmarg+ β4ceoten + β5comten + u, using the data in CEOSAL2.CSV, was R2 = .353 (n = 177). When ceoten2 and comten2 are added, R2 = .375. Is there evidence of functional form misspecification in this model?

User Arnaud Bertrand
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Answer:

Please see attachment

Step-by-step explanation:

Please see attachment

In Problem 11 in Chapter 4, the R-squared from estimating the model log(salary) = β0 + β1 log-example-1
In Problem 11 in Chapter 4, the R-squared from estimating the model log(salary) = β0 + β1 log-example-2
User Ryan Shocker
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