A researcher wants to study the determinants of crime in Turkey. For this she has data 81 Turkish provinces over 17 years. She estimates by OLS the following regression crmpc = Bo + D; + B1polpc + a;+UR where crmpc is the crime rate per head of population, polpc is the number of police officers per 1000 individuals. The parameter D, refers to year fixed effects and is one in year t and zero for all other years. a, is the unobserved province fixed effect and u, is a random unobservable term (idiosyncratic shock). The First Difference estimator (Check all that apply). Your answer: O allows covariance between u, and polpc O does not allow covariance between a , and polpc O allows covariance between a, and polpc

A researcher wants to study the determinants of crime in Turkey. For this she has data 81 Turkish provinces over 17 years. She estimates by OLS the following regression crmpc = Bo + D; + B1polpc + a;+UR where crmpc is the crime rate per head of population, polpc is the number of police officers per 1000 individuals. The parameter D, refers to year fixed effects and is one in year t and zero for all other years. a, is the unobserved province fixed effect and u, is a random unobservable term (idiosyncratic shock). The First Difference estimator (Check all that apply). Your answer: O allows covariance between u, and polpc O does not allow covariance between a , and polpc O allows covariance between a, and polpc

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 2E

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