The Minister of Finance has hired you as an economic consultant to estimate the impact of a new tax on carbon use on household spending. To do this, you have obtain data for a large sample of 1,500 individuals over the last 5 years (7,500 observations in total) in the United Kingdom where a carbon tax was put in place 3 years ago. You start with a very simple regression model to get a feel for the data: Y = A+ BX + e where Y = annual spending on all goods and services and X = tax price on carbon. Unfortunately the tax price on carbon varies by type of individual, so it is measured with error. a) If the true value of B is known to be -0.79, based on reliable estimates for other countries, the variance of the measurement error is estimated to be 2.4, and the varian of X is estimated to be 1.6, the estimated slope coefficient for B could be biased by an amount equal to: b) This type of measurement error will result in the slope B being:

The Minister of Finance has hired you as an economic consultant to estimate the impact of a new tax on carbon use on household spending. To do this, you have obtain data for a large sample of 1,500 individuals over the last 5 years (7,500 observations in total) in the United Kingdom where a carbon tax was put in place 3 years ago. You start with a very simple regression model to get a feel for the data: Y = A+ BX + e where Y = annual spending on all goods and services and X = tax price on carbon. Unfortunately the tax price on carbon varies by type of individual, so it is measured with error. a) If the true value of B is known to be -0.79, based on reliable estimates for other countries, the variance of the measurement error is estimated to be 2.4, and the varian of X is estimated to be 1.6, the estimated slope coefficient for B could be biased by an amount equal to: b) This type of measurement error will result in the slope B being:

College Algebra

7th Edition

ISBN:9781305115545

Author:James Stewart, Lothar Redlin, Saleem Watson

Publisher:James Stewart, Lothar Redlin, Saleem Watson

Chapter1: Equations And Graphs

Section: Chapter Questions

Problem 10T: Olympic Pole Vault The graph in Figure 7 indicates that in recent years the winning Olympic men’s...

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