Wildcat activity.  Wildcats are wells drilled to find and produce oil and/or gas
in an improved area or to find a new reservoir in a field previously found to be
productive of oil or gas or to extend the limit of a known oil or gas reservoir.
The following table gives data on these variables:

Download:  0721.dat ,  0721.xls

(a) Can you offer an a  priori ration ale to this model? (Suggested Answer)

(b) Estimate the regression Yt = £]1 + £]2X2t + £]3lnX3t + £]4X4t + £]5X5t + Ut (Eviews) (Rats)

(c) Comment on your results in view of your prior expectations. (Suggested Answer)

(d) What other specification would you suggest to explain wildcat activity? Why?
      (Suggested Answer)