ps3 - Department of Economics University of California...

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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 t-tests on them. Multi-Part Questions.
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This note was uploaded on 02/02/2012 for the course ECON 140 taught by Professor Duncan during the Spring '08 term at University of California, Berkeley.

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ps3 - Department of Economics University of California...

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