Problem Set 4 - Problem Set 4 Economics 103 Winter 2009 Due...

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Problem Set 4 Economics 103 Winter 2009 Due Tuesday, March 3, 2009 Question 1: True/False/Explain 1. If you estimate the following equation with a dummy indicating that you are a noncitizen instead of a dummy=1 if you are a citizen, you will get the same coefficients and standard errors. Y= 142 + 37 * citizen (72) (17.2) 2. In the following regression, if you divide the SAT score by 10, the coefficient will be 10 times larger and the standard error won’t change. Y= 142 + 38 * SAT (72) (17.2) 3. You have to worry about multicollinearity in the multiple regression model because OLS estimators are no longer efficient. 4. If you reject a joint null hypothesis that a group of regressors have no effect on the dependent variable using the F-test, then a series of individual t-tests will reject as well. 5. To decide whether 0 1 i i Y X u or 0 1 ln( ) i i Y X u fits the data better, you can compare the regression 2 R . 6. In the regression model 0 1 2 3 ( ) i i i i i i Y X D X D u , where X is a continuous variable and D is a binary variable, 3 indicates the slope of the regression when D=1. 7. In the regression model 0 1 2 3 ( ) i i i i i i Y X D X D u , where X is a continuous variable and D is a binary variable, 2 is the difference in means in Y between the two categories. 8. To test whether or not the regression function Y i = β 0 + β X i + β X i ²+...+ β p X i p is linear rather than a polynomial of order p, you would use a t-test. 9. In the presence of omitted variables, OLS estimators are unbiased but inefficient. 10. When you include irrelevant variables, OLS estimators are biased.
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