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Applied Econometrics Midterm
5
th
of October, 2005
This exam consists of
ten
short questions
(
worth two points apiece
)
and
four
long
questions
(
worth fifteen points each
)
, for a total of 80 points. You have 80 minutes
to answer all completely and clearly in the space provided.
Short Questions
1.
List the
three assumptions
of the OLS model.
2. What is the difference between an
estimator
and an
estimate?
3. What does it mean for an estimator to be
unbiased?
4. What two conditions must an
instrumental variable
satisfy?
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irrelevant variables
in your model?
6. How does
classical measurement error
affect OLS estimates?
7. What effects do
unusual observations
(
or
“
outliers
”)
have on OLS estimates?
8. If your data has
heteroskedasticity
, what must you do to make correct
inferences using the OLS estimates of
!
?
9. What is the meaning of
endogeneity?
10. State the formula for the
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 Spring '08
 Staff
 Econometrics

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