econ2p91_ReviewQuestionsMultipleChoice_Chapter10

# econ2p91_ReviewQuestionsMultipleChoice_Chapter10 - Review...

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

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

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

View Full Document
.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.
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