This repository is the midterm homework for the class Advanced Econometrics. We were asked to:
- In a first part, present the application, based on standard parametric econometric models: (1) explain what is your study about; (2) which regression model is used; (3) show estimation results; and (4) make interpretation and draw conclusion.
- In a second part, present the application in a similar way, but based on nonparametric econometric models. You may use Generalized Additive Models (GAM), based on kernel or spline methods.
- In a last part, compare the results between the two approaches. In particular, you will explain if some nonlinearities were missed in the parametric approach and you will then try to find another parametric model that would be more appropriate.
This repository include (1) the final report, (2) the R codes and (3) the dataset we used for this midterm project.
Using data from Airbnb, our project proposes three models to account for non-linear relationships and to offer insights into the drivers of Airbnb prices in New York in 2019. The results indicate that the generalized additive model (GAM) with an interaction function performs better than the other models.