econ2p91_ReviewQuestionsMultipleChoice_Chapter10

econ2p91_ReviewQuestionsMultipleChoice_Chapter10 - Review...

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Review Questions: Chapter 10 Regression with Panel Data Multiple Choice 1) The notation for panel data is ( , ), 1,..., it it X Y i n = and 1,..., t T = because a. we take into account that the entities included in the panel change over time and are replaced by others. b. the X ’s represent the observed effects and the Y the omitted fixed effects. c. there are n entities and T time periods. d. n has to be larger than T for the OLS estimator to exist. 2) The difference between an unbalanced and a balanced panel is that .a you cannot have both fixed time effects and fixed entity effects regressions. .b an unbalanced panel contains missing observations for at least one time period or one entity. .c the impact of different regressors are roughly the same for balanced but not for unbalanced panels. .d in the former you may not include drivers who have been drinking in the fatality rate/beer tax study. 3) The Fixed Effects regression model .e has n different intercepts. .f the slope coefficients are allowed to differ across entities, but the intercept is “fixed” (remains unchanged). .g has “fixed” (repaired) the effect of heteroskedasticity. .h in a log-log model may include logs of the binary variables, which control for the fixed effects. 4) In the Fixed Effects regression model, you should exclude one of the binary variables for the entities when an intercept is present in the equation .i because one of the entities is always excluded. .j because there are already too many coefficients to estimate. .k to allow for some changes between entities to take place. .l to avoid perfect multicollinearity. 5) In the Fixed Effects regression model, using ( n – 1) binary variables for the entities, the coefficient of the binary variable indicates 1
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.m the level of the fixed effect of the i th entity. .n will be either 0 or 1. .o the difference in fixed effects between the i th and the first entity. .p the response in the dependent variable to a percentage change in the binary variable. 6. In the Fixed Time Effects regression model, you should exclude one of the binary variables for the time periods when an intercept is present in the equation a. because the first time period must always excluded from your data set. b. because there are already too many coefficients to estimate. c. to avoid perfect multicollinearity. d. to allow for some changes between time periods to take place.
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