{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

metricsexam2s08sol

# metricsexam2s08sol - Econometrics Exam 2 By writing your...

This preview shows pages 1–3. Sign up to view the full content.

Econometrics Exam 2 By writing your PID below, you are indicating April 29, 2008 your intention to abide by the honor pledge: PID: This exam consists of ten short questions ( worth four points apiece ) and five long questions ( worth twelve 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 is the advantage of using instrumental variables, relative to OLS, and what is the disadvantage? IV is unbiased, regardless of whether the explanatory variables are endogenous. However, it is less efficient than OLS. 2. What would cause the first - difference and fixed - effects estimators to give substantially different results? A failure of “strict exogeneity” causes both estimators to be biased, but biased in different ways so in this case, we would expect FD and FE to give different results. 3. When estimating a system of equations, what would determine whether you use “seemingly unrelated regression” or “three - stage least squares”? SUR is appropriate when all the explanatory variables are exogenous; 3SLS is appropriate when ( some of ) the explanatory variables are endogenous.

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

View Full Document
4. What does it mean for an estimator to be “unbiased”? E [ ˆ ! ] = ! 5. List three tests you should perform, if possible, after estimating a model using instrumental variables. The Hausman test; the test for overidentification ( if possible ) , and the test for weak instruments. 6. State the assumptions of the OLS model.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern