Department of Economics
Spring 2011
University of California
Prof. Woroch
Economics 140:
Problem Set 3
Due: Thursday, March 10, 2011, 9:30 AM (before lecture)
Instructions:
Include the names and SIDs of all members of your study group (a maximum of three)
and the name of the GSI who is the same GSI for all members.
True/False/Uncertain and Explain.
Below are two statements that may be true or false or possibly
ambiguous.
State which one you believe to be the case, and more importantly, give a detailed
explanation for your answer.
Supply additional assumptions if necessary for your answer.
1.
A researcher should go ahead and add a new regressor whenever adding it to the regression
model increases the adjusted
2
R
because that measure of goodness of fit corrects for the fact
that the usual
2
R
will always increase with inclusion of an additional variable.
2.
A researcher is worried about multicollinearity in a multivariate regression model because the
correlation coefficient between two regressors,
2
X
and
3
X
, is equal to 0.89.
Her solution is to
drop one of the regressor,
3
X
,
expecting that the t stat value on the other remaining regressor,
2
X
, will get much larger.
3.
If you reject a joint null hypothesis using the
F
test in a multivariate linear regression model,
then you will reject the null hypotheses that each of the coefficients is equal to zero by
performing individual ttests on them.
MultiPart Questions.
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 Spring '08
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 Economics, Econometrics, Regression Analysis, Null hypothesis, regression model, Los Angeles Dodgers, joint null hypothesis

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