Practice Questions for MT2

Practice Questions for MT2 - Econ 141 Unofficial Practice...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Econ 141 Unofficial Practice Questions: 1. Suppose you have the linear model Y t = b 1 + b 2 *X 2t + b 3 *X 3t +u t . a. If 2 , 2 * ) ( t t X k u Var = , where k is some constant, how can you transform the equation and perform the least squares procedure to get estimates of b 2 and b 3 ? Describe all the steps. b. If you decide to ignore the heteroskedasticity in a. above, are your OLS estimates of b 2 and b 3 still BLUE? Are the standard hypothesis tests still valid? Explain carefully. c. Now you are not sure that there is heteroskedasticity in the model but you suspect it is a linear function of the variables X 2 and X 3 . How would you test this hypothesis using the Whites test? Describe all the steps. 1. Consider the following model: i i i x y + + = 2 1 where x i = 0 or 1 is an indicator variable. In order to estimate a more flexible model, we fit a 2 nd order polynomial of x : i i i i x x y + + + = 2 3 2 1 When we run the regression, Excel will not provide an estimate for 3 . Why? a. Which model would have a higher R 2 ? 2. Substantial research documents a statistically significant relationship between an individual's height, H i , and the logarithm of his or her wages, logW i . This odd ....
View Full Document

Page1 / 3

Practice Questions for MT2 - Econ 141 Unofficial Practice...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online