{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Econ122A+Sample+Final+Exam+-+Solutions

# A omitting a constant term b including in the

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: sample provides a smaller standard error for the estimate of β and therefore a larger t statistic. 3. For a linear regression model Y = α + β X + u , where X and Y are mean zero, in which of the following cases OLS estimators will be biased? a) Omitting a constant term. b) Including in the regression only X while the true model is Y = α + β1 X + β 2 X 2 + u. c) In the sample, some data on X are missing randomly. d) None of the above. 1 Answer: B If the true model is Y = α + β1 X + β 2 X 2 + u , including only X in the model means you are estimating the wrong model. OLS estimators tend to be biased. 4. Suppose you have the following estimated equation, log soda = 0.8 − 0.07 log price, where soda refers to weekly soda consumption per capita an...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online