BUAN 6312 Exam 1 UPDATED Questions and CORRECT Answers
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Course
BUAN 6312
Institution
BUAN 6312
BUAN 6312 Exam 1 UPDATED Questions
and CORRECT Answers
Endogeniety - CORRECT ANSWER- Correlation between explanatory variable and error
term
Endogeniety causes the least squares estimator to be what? - CORRECT ANSWER-
Biased and inconsistent
When what is correlated with the explanatory vari...
BUAN 6312 Exam 1 UPDATED Questions
and CORRECT Answers
Endogeniety - CORRECT ANSWER- ✔✔Correlation between explanatory variable and error
term
Endogeniety causes the least squares estimator to be what? - CORRECT ANSWER-
✔✔Biased and inconsistent
When what is correlated with the explanatory variable, the regression error will be correlated
with the explanatory variable? - CORRECT ANSWER- ✔✔Omitted variable
Instrumental variables have no effect on what? - CORRECT ANSWER- ✔✔Y
Instrumental variables cannot be correlated with ___ but must be correlated with___ -
CORRECT ANSWER- ✔✔e,x
Instrumental variables are biased but what? - CORRECT ANSWER- ✔✔Consistent
Why are instrumental variable estimators less efficient than LSE? - CORRECT ANSWER-
✔✔Variance of IV estimator is always larger than LSE
Instrumental variables need an F-stat of at least what? - CORRECT ANSWER- ✔✔10
The number of what should be greater than or equal to the number of endogenous variables? -
CORRECT ANSWER- ✔✔exogenous instruments
If failing to reject Ho in a Hausman test for IVs, LSE and IVE are what? - CORRECT
ANSWER- ✔✔consistent
If failing to reject Ho in a Hausman test for IVs, which estimator should be used? -
CORRECT ANSWER- ✔✔LSE
, What distribution does the Hausman test use? - CORRECT ANSWER- ✔✔Chi square
Which model captures behavioral differences/individual heterogeneity in the intercept? -
CORRECT ANSWER- ✔✔fixed effects
In which model are intercepts and slopes constant across individuals? - CORRECT
ANSWER- ✔✔random effects
For which model can time invariant characteristics NOT be correlated with regressors? -
CORRECT ANSWER- ✔✔random effects
For which model can Ui be correlated with regressors without bias? - CORRECT ANSWER-
✔✔fixed effects
For which model does variance differ across individuals, causing heteroskedasticity? -
CORRECT ANSWER- ✔✔random effects
For which model do individuals have different intercepts? - CORRECT ANSWER- ✔✔fixed
effects
Which estimator should be used if the Ho is rejected in a Hausman test for RE vs FE? -
CORRECT ANSWER- ✔✔fixed effects
Failure to reject Ho for the FE F-test and RE LM test means which estimator should be used?
- CORRECT ANSWER- ✔✔Pooled OLS
Rejection of Ho for the FE F-test means which model should be used? - CORRECT
ANSWER- ✔✔fixed effects
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