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BUAN 6312 Exam 2 Practice Questions and Answers

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BUAN 6312 Exam 2 Practice Questions and Answers Endogeniety - ANSWER-Correlation between explanatory variable and error term Endogeniety causes the least squares estimator to be what? - ANSWER-Biased and inconsistent When what is correlated with the explanatory variable, the regression error wi...

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BUAN 6312 Exam 2 Practice Questions

and Answers


Endogeniety - ANSWER✔✔-Correlation between explanatory variable and error term


Endogeniety causes the least squares estimator to be what? - ANSWER✔✔-Biased and inconsistent


When what is correlated with the explanatory variable, the regression error will be correlated with the

explanatory variable? - ANSWER✔✔-Omitted variable


Instrumental variables have no effect on what? - ANSWER✔✔-Y


Instrumental variables cannot be correlated with ___ but must be correlated with___ - ANSWER✔✔-e,x


Instrumental variables are biased but what? - ANSWER✔✔-Consistent


Why are instrumental variable estimators less efficient than LSE? - ANSWER✔✔-Variance of IV estimator

is always larger than LSE


Instrumental variables need an F-stat of at least what? - ANSWER✔✔-10


The number of what should be greater than or equal to the number of endogenous variables? -

ANSWER✔✔-exogenous instruments




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If failing to reject Ho in a Hausman test for IVs, LSE and IVE are what? - ANSWER✔✔-consistent


If failing to reject Ho in a Hausman test for IVs, which estimator should be used? - ANSWER✔✔-LSE


What distribution does the Hausman test use? - ANSWER✔✔-Chi square


Which model captures behavioral differences/individual heterogeneity in the intercept? - ANSWER✔✔-

fixed effects


In which model are intercepts and slopes constant across individuals? - ANSWER✔✔-random effects


For which model can time invariant characteristics NOT be correlated with regressors? - ANSWER✔✔-

random effects


For which model can Ui be correlated with regressors without bias? - ANSWER✔✔-fixed effects


"Within" estimation produces incorrect what? - ANSWER✔✔-standard errors


For which model does variance differ across individuals, causing heteroskedasticity? - ANSWER✔✔-

random effects


For which model do individuals have different intercepts? - ANSWER✔✔-fixed effects


Which estimator should be used if the Ho is rejected in a Hausman test for RE vs FE? - ANSWER✔✔-fixed

effects




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