HW 2 answers

HW 2 answers - Economics 120C Professor Yongil Jeon Winter...

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Economics 120C Name: _________________________ Professor Yongil Jeon Winter 2009 Student ID#: ___________key___________ Answer Key to Homework #2 – Winter 2009, Econ 120C (A part of Final Exam, Summer 2008-Session 2, Econ 120C) Answer all questions on separate paper. This problem set should be handed in to Professor Jeon at the beginning of your class on Wednesday, February 25th, 2009 . Problem sets may not be handed in once solutions have been distributed. Please write down your name and PID clearly. Good luck! Multiple Choices 1. (3 points) The notation for panel data is ( , ), 1,. .., it it X Yi n = and 1,. .., tT = because a. we take into account that the entities included in the panel change over time and are replaced by others. b. the X ’s represent the observed effects and the Y the omitted fixed effects. c. there are n entities and T time periods. d. n has to be larger than T for the OLS estimator to exist. Answer : c 2. (3 points) cov (, | , )0 it is it is uu X X = for ts means that a. there is no perfect multicollinearity in the errors. b. division of errors by regressors in different time periods is always zero. c. there is no correlation over time in the residuals. d. conditional on the regressors, the errors are uncorrelated over time. Answer : d 3. (3 points) Assume that data become available on other characteristics of the subjects that are relevant to determining the experimental outcome. Then including these determinants explicitly results in a. the limited dependent variable model. b. the differences in means test. c. the multiple regression model. d. large scale equilibrium effects. Answer : c
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2 Answer to HW #2, ECO 120C, Winter 2009 4. (15 points) Consider the binary variable version of the fixed effects model Y it = β 0 + 1 X it + γ 1 D 1 i + 2 D 2 i + . . . + n Dn i + u it , a. (5 points) Suppose that n=3. Show that the inclusion of all binary regressors and the “constant” regressor are perfectly multicollinear, that is, express one of the variables D1 t , D2 t , D3 t , X 0,it
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This note was uploaded on 03/21/2009 for the course ECON 120C taught by Professor Stohs during the Spring '08 term at UCSD.

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HW 2 answers - Economics 120C Professor Yongil Jeon Winter...

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