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In the first regression the contemporaneous drop is 0.23. One period later the effect is
. In the second regression, the one period effect is 0.97. One
period later is the effect is
. Since the coefficients in a regression
with a lagged endogenous variable and serial correlation are biased, I’d go with the
second forecast.
5.
(
( ) )
( ) ( ) 6. We can think of the underlying latent variable in the probit as being
.
The probability of being married changes nonlinearly, but in the same direction, as does the
latent variable. The marginal effect of education on the latent variable is 0.085...
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This test prep was uploaded on 03/19/2014 for the course ECON 140a taught by Professor Staff during the Spring '08 term at UCSB.
 Spring '08
 Staff
 Economics, Econometrics

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