1. State if each of the following statements is true or not, and BRIEFLY give your reasoning. (3 sentences maximum for each question)
(d) By using a panel data set one can control for time-invariant unobserved attributes of the members of the cross section, which are correlated with explanatory variables. (3 marks)
(e) For FE estimator to be consistent, the idiosyncratic errors uit must be homoskedastic. (3 marks)
(f) By using “, robust” option in Stata, the cluster robust standard errors will be obtained for FE estimation. (3 marks)
1. State if each of the following statements is true or not, and BRIEFLY give your reasoning. (3 sentences maximum for e...
1. State if each of the following statements is true or not, and BRIEFLY give your rea- soning. (3 sentences maximum for each question) (d) By using a panel data set one can control for time-invariant unobserved attributes of the members of the cross section, which are correlated with explanatory vari- ables. (3 marks) (e) For FE estimator to be consistent, the idiosyncratic errors u must be homoskedas- tic. (3 marks) (f) By using ", robust" option in Stata, the...
1. State if each of the following statements is true or not, and BRIEFLY give your rea- soning. (3 sentences maximum for each question) (g) By pooling two or more cross sections from the same population we have more powerful tests. (3 marks) (h) The random effects estimator is also called the "within" estimator. (2 marks) (i) The sample mean used in the time-demean transformation is the sample mean for the tth time across all cross section units, rather than...
1. State if each of the following statements is true or not, and BRIEFLY give your rea- soning. (3 sentences maximum for each question) (a) The 2SLS estimator cannot have a larger asymptotic bias than OLS. (3 marks) (b) Hausman test for overidentification has a x2 distribution asymptotically with a degree of freedom that is equal to the number of exogenous variables in the data. (3 marks) (c) Proxy variable and instrumental variables can sometimes be used interchangeably (3 marks)...
1. State if each of the following statements is true or not, and BRIEFLY give your rea- soning. (3 sentences maximum for each question) (g) By pooling two or more cross sections from the same population we have more powerful tests. (3 marks) (h) The random effects estimator is also called the "within" estimator. (2 marks) (i) The sample mean used in the time-demean transformation is the sample mean for the tth time across all cross section units, rather than...