Practical 4 - Pr act i cal 4 Januar y 27, 2010 Exam e of...

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Pr act i cal 4 Januar y 27, 2010
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Exampl e of Speci f i cat i on ( or Om i t t ed Var i abl e) Bi as Om i t t ed var i abl e bi as? I F we om i t an expl anat or y var i abl e t hat shoul d be i n t he r egr essi on ( i . e. usef ul i n expl ai ni ng t he var i at i on i n LHS var i abl e) AND t he om i t t ed var i abl e i s cor r el at ed wi t h t he al r eady i ncl uded expl anat or y or RHS var i abl es THEN OLS est i mat e so of t he i ncl uded RHS var i abl es wi l l be bi ased Model 1: Model 2:
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Hypot hesi s t est i ng ( 1) Use Wool dr i dge <hpr i ce2> SSS Si gn, Si gni f i cance and Si ze Check t hat t he si gn makes sense Use cr i t i cal - t of “ 2” when t est i ng t he si gni f i cance of i ndi vi dual par amet er s ( pr ovi ded t he sampl e si ze i s l ar ge, ot her wi se use t - t abl e) Check t hat t he si ze of t he par amet er i s r easonabl e
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Hypot hesi s t est i ng ( 2) Test i ng t he over al l si gni f i cance of t he
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This note was uploaded on 03/14/2010 for the course ECON econmetric taught by Professor Yy during the Spring '10 term at Seoul National.

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Practical 4 - Pr act i cal 4 Januar y 27, 2010 Exam e of...

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