Suppose that the true data-generating process includes an intercept along with the variables X2 and X3. Suppose that you inadvertently leave X3 out of your estimated model and only include an intercept and X2. Suppose further that X2 and X3 is positively correlated with Y, and X2 and X3 are negatively correlated with each other. As a result, the estimated coefficient on X2 (when X3 is omitted) is generally going to be: unbiased. too big. too small, O leptokurtic.
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- In general, what is true about the relationship between the Sum of Squared Residuals in the restricted and unrestricted model? a. SSRr = R-squared * SSRur b. SSRr < SSRur c. SSRr > SSRur d. SSRr = SSRurtate whether the following statements are true or false with a brief explanation: a) Logit model is estimated by minimising the sum of the squares residuals of the model. b) In difference-in-differences analysis, the assumption of ‘parallel trends’ is generally testable. c) Suppose you have estimated a model Y = 0.2 – 0.7D + 2X + 0.4X*D. Y and X are continuous variables and D is a dummy variable. If D=1, the marginal effect of X on Y is always larger, and therefore the predicted Y is always larger, than in the case where D=0. d) The first order autoregressive model can be stationary or non-stationary. e) The bias in Instrumental Variables estimator depends on the number of observations.Consider the following multiple regression Price=118.9+0.594BDR+23.5Bath+0.195Hsize+0.004Lsize+0.095Age−48.5Poor, R2=0.75, SER=41.5 (22.7) (2.56) (8.56) (0.017) (0.00049) (0.315) (10.7) The numbers in parentheses below each estimated coefficient are the estimated standard errors. A detailed description of the variables used in the data set is available here . Suppose you wanted to test the hypothesis that BDR equals zero. That is, H0: BDR=0 vs H1: BDR≠0 Report the t-statistic for this test. The t-statistic is ________ (Round your response to three decimal places)
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