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Unformatted text preview: C LAVE U NICA : __________________ PLEASE DO NOT WRITE YOUR NAME . Applied Econometrics Midterm 3 rd of July, 2006 This exam consists of ten short questions ( worth four points each ) and four long questions ( worth fifteen points each ) , for a total of 100 points. You have 120 minutes to answer all completely and clearly in the space provided. Short Questions 1. What conditions should an instrumental variable satisfy? 2. Describe how to do the White test for heteroskedasticity. 3. A researcher estimates the model y i = ! 1 + ! 2 x i + e i . His estimate of ! 2 is 2.073, with a standard error of 0.313. When he tests the hypothesis that ! 2 = 1 . 5 , he finds a p value of 0.068. Based on this, he concludes, there is less than a 7 % probability that the ! 2 equals 1.5, as hypothesized. Is this correct? Why or why not? 4. When does simultaneity bias occur, and what techniques can eliminate the bias?...
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 Spring '08
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 Econometrics

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