2003-Midterm

2003-Midterm - EC 331 MIDTERM FALL 2003 NAME: SHOW ALL YOUR...

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EC 331 MIDTERM FALL 2003 NAME: SHOW ALL YOUR WORK AND WRITE CLEARLY TO GET CREDIT 1. (25 points) Consider, as an alternative to the least squares estimator, the linear estimator [ y C X X X + = ' ) ' ( 1 β ] , where is some matrix that is conformable with . C xT 2 ' ) ' ( 1 X X X a) Is an unbiased estimator? If not, how would you make it unbiased? b) What is the variance-covariance expression for the unbiased version of , that is, the estimator with the conditions developed in part (a). c) Contrast the variance-covariance matrix for with the variance-covariance expression for b . How would you reach a conclusion as to which is “best” in terms of sampling variability? 1
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2. (15 points) You are given the regression output that is obtained when you estimated the relationship on annual data. 12 tt tax income e β =+⋅ + Dependent Variable: TAX Method: Least Squares Sample: 1 60 Included observations: 60 TAX=C(1)+C(2)*INCOME Coefficient Std. Error t-Statistic Prob.
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2003-Midterm - EC 331 MIDTERM FALL 2003 NAME: SHOW ALL YOUR...

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