You have collected data for 104 countries to address thedifficult questions of the determinants for differences in thestandard of living among the countries of the world. Your model hasthe relative personal income (RelPersInc) determined bythe saving rate (SK) and population growth rate(n). To test the predictions of this growth model, you runthe following regression:

= 0.339 – 12.894 × n + 1.397 × SK,     R2=0.621

                 (0.068) (3.177)     (0.229)

Numbers in parentheses are the standard errors.

1. Calculate the t-statistics and test whether or noteach of the population parameters are significantly different fromzero.

1. Calculate the overall F-statistic for the regression.Test the null hypothesis that that all the slope coefficients areequal to zero at the 5% level.

You remember that human capital in addition to physical capitalalso plays a role in determining the standard of living of acountry. You therefore collect additional data on the averageeducational attainment and add this variable (Educ) to theabove regression. This results in the modified regressionoutput:

= 0.046 – 5.869 × n + 0.738 × SK + 0.055 ×Educ,    R2=0.775,

                     (0.079)   (2.238)     (0.294)          (0.010)

1. How has the inclusion of Educ affected your previousresults?

1. Perform a test to find out if it is worth keeping Educ in themodel at the 5% level.