Empirical research was conducted to investigate the variables that impact the size distribution of manufacturing firms in international markets (World Development, Vol. 20,1992). Data collected on n = 54 countries were used to model the country's size distribution y, measured as the share of manufacturing firms in the country with 100 or more workers. The model studied was E(y)
a. The researchers hypothesized that the higher the credit ratio of a country, the smaller the size distribution of manufacturing firms. Explain how to test this hypothesis.
b. The researchers hypothesized that the higher the stock ratio of a country, the larger the size distribution of manufacturing firms. Explain how to test this hypothesis.