Question

Table 2 below shows regression results from the study of Schularick and Taylor (2012).1 The dataset comprises annual panel data for 12 countries between 1870 and 2008. The study asks a simple question: does a country's recent history of credit growth help predict a financial crisis? The dependent variable is the probability of a financial crisis event pit in country i in year t.

Table 2. Credit growth and financial crisis.

	Ordinary Least Squares
	Country fixed effects
Explanatory variables	dependent variable in year t: pit
credit growth in the previous year (t-1)	-0.0273
	(0.0815)
credit growth in year t-2	0.302
	(0.0872)
credit growth in year t-3	0.0478
	(0.0853)
credit growth in year t-4	0.00213
	(0.0814)
credit growth in year t-5	0.0928
	(0.0752)
Observations	1,272
Countries	14
R-squared	0.023
Standard errors appear in parentheses.

Use the |t|>2 rule of thumb in your answers to indicate significance at the 95% level

What is the estimated equation that corresponds to the results of Table 2? Which coefficients in Table 2 are statistically significant?

Answer 1