ProblemSet8

ProblemSet8 - ECON 3200 Introduction to Econometrics...

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ECON 3200 Introduction to Econometrics Problem set 8 (due date: April 24, 2009) Problem 1 (Wooldridge 15.1) Consider a simple model to estimate the e/ect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university: GPA = & 0 + 1 PC + u; where PC is a binary variable indicating PC ownership. 1. Why might PC ownership be correlated with u ? 2. Explain why PC this mean parental income is a good IV for PC ? Why or why not? 3. Suppose that, four years ago, the university gave grants to buy comput- ers to roughly one-half of the incoming students, and the students who received grants were randomly chosen. Carefully explain how you would use this information to construct an instrumental variable for PC . Problem 2. (Wooldridge 15.8) Suppose you want to test whether girls who schools. You have a random sample of senior high school girls from a state
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ProblemSet8 - ECON 3200 Introduction to Econometrics...

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