This assignment is mainly designed for you to practice an empirical work using any one of statistical softwares. You are recommended to use STATA, but you can use SAS, MATLAB, R, GAUSS, or EVIEW if you have your own reasons against STATA. For the STATA users, print and submit your log-file in addition to your main analysis. For the others, report the results produced by your program using copy-and-paste with your commands and results in addition to your main analysis.

(Preparation) Download TRADE.txt (data file) and Distance.txt (description file) from World Bank, and use these for this assignment. Our main interest is to study the effect of distance between two regions on trade.

1. Report the average values of the main variables, along with their standard deviations.

2. Make a figure which shows a scatterplot of log of trade and log of distance between two regions and at the same time an OLS regression line. [STATA command:

twoway (scatter y x) (lfit y x)í. Try help twoway for more information.]