Use dataset TBL7-1 from Greene 2000 (see below). Variable definitions are on p.953 of Greene under "Table A7.1". Unless you are working on fmrisc's copy of Stata (which already contains these packages), you will need to install the "whitetst" and "bpagan" packages from SSC-IDEAS (the easiest way: use the "Help" -> "STB and User-Written Programs" -> www.stata,com -> "Links" to access the archive; files are stored in directories by the first letter of their name).

1. Fit a regression model relating value added (valueadd) to labor and capital.
2. Use the 'whitetst' (White's general test) for heteroskedasticity on the model. Comment.
3. Use the 'bpagan' (Breusch-Pagan) test for heteroskedasticity on the model, using labor and capital as auxiliary variables. Comment.
4. Estimate the model in ratio form, where value added per unit of labor is regressed on the capital/labor ratio. Conduct the White test. Conduct the Breusch-Pagan test, using the capital/labor ratio and its square as auxiliary variables.
5. Examine the data and the residuals from model (d). Is there a particular unusual observation? If so, reestimate the model without that observation, rerun the B-P test, and comment on the results.
6. Reestimate the levels model of part (a) in double-log form. Comment on the economic interpretation of the coefficients. Has transforming the variables into logs rendered the errors homoskedastic?
7. Test the model of part (f) for constant returns to scale (use the test command).
8. Impose CRTS on the model of part (f) algebraically and comment on the results.
9. Impose CRTS on the model of part (f) using Stata's 'constraint' and 'cnsreg' commands. Contrast the results to those derived in part (h).

• The datasets are accessible on both fmrisc.bc.edu, in directory

You cannot write in either of those directories; you may save the file, with any changes, to your own directory on either system (i.e. into /u/username on UNIX, or Sleek4:[PersonalStorage]:Yourname-EC on Sleek).