{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

2010 Final - Economics 241B 2010 Final 1 You are studying...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 241B 2010 Final 1. You are studying the demand for the quality of public schools. As there are no good physical measures of the quality of public schools, you use expenditures in place of quality, with the logic that increases in expenditures are associated with increases in quality. You have the good fortune to observe E i , the level of expenditures per student desired by household i . The model you estimate is ln E i = ° 0 + ° 1 ln Tax i + ° 2 ln Income i + ° 3 K 11 i + ° 4 K 16 i + U i; (1) where Tax - increase in household taxes for an additional $1 of expenditures Income - income after local taxes K 11 - # children age 1-11 K 16 - # children age 12-16. Let ^ ° denote the OLS estimator of the coe¢ cient vector, let x i indicate the vector of regressors (including a constant) for household i and let X = [ x 1 ; : : : ; x n ] 0 . a. Establish the truth, or falsehood, of each statement: E [ U i j X ] = 0 ) E [ U i j x i ] = 0 E [ U i j x i ] = 0 ) E [ U i j X ] = 0 : Which of the assumptions do you think are valid for the model of public school expenditures?
Image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern