Question

Econometric 1. . If the covariance between ut and ut-1 increases as t gets larger, then...

Econometric


1. . If the covariance between ut and ut-1 increases as t gets larger, then is ut stationary? Briefly explain

2. When we violate exogeneity how does this affect OLS ? Does this make OLS bias?

3. Define efficiency.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

2. In an OLS regression model, we make a basic assumption of exogeneity which means that the INDEPENDENT VARIABLE (X) is neither correlated with the DEPENDENT VARIABLE (Y) nor the error term. When we violate this assiumption, we make the model endogenous i.e. the independent variable is correlated with either the dependent variable or the error term. And this makes the model biased giving the biased results.

3. In a regression model, we use alpha and beta as the estimators for variables X and Y.

An estimator becomes efficient when it requires less observations to give results. Efficiency of an estimator can also be described as Minimum Variance Unbiased estimator.

Thus efficient estimator leads to the efficiency of regression model.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Holding asset expected return constant, our efficient frontier gets better when the covariance (correlations) between...
1. Holding asset expected return constant, our efficient frontier gets better when the covariance (correlations) between our assets’ returns does what? 2. What do you think is the biggest hurdle when implementing the Markowitz portfolio selection model? Briefly discuss how you address the problem. 3. Describe one way that the risk borne by investors in a securitization can be lessened.
1.) What meanings does the use of space convey? When someone has a larger house, a...
1.) What meanings does the use of space convey? When someone has a larger house, a larger office, or a larger seat on the airplane than yours, what conclusions do you make about that person? 2.) Which type of listening—informational, critical, empathic—do you engage in most often? Which type do you enjoy the most? Why? 3.) Compare and contrast a) jealousy and envy; b) liking and love; and c) sadness and depression. 4.) Identify and briefly define each of the...
1. Briefly describe the difference between the “merchandise trade balance” and the “current account balance.” Which...
1. Briefly describe the difference between the “merchandise trade balance” and the “current account balance.” Which one do we typically hear about on the news? 2. In the context of the national savings and investment identity, briefly describe the main sources for both the supply of and demand for capital in the U.S. economy. 3. Briefly explain how short-term movements in the business cycle affect the trade balance.
1. Is the United States’ labor supply more inelastic or more elastic? Briefly summarize the competing...
1. Is the United States’ labor supply more inelastic or more elastic? Briefly summarize the competing theories. 2. The demand for energy drinks is more elastic than the demand for milk. Would a tax on energy drinks or a tax on milk have a larger deadweight loss? Explain. 3. You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully. 4. For the economy as a...
Questions: 1. What do we mean by cost behavior? 2. When activity increases, does the unit...
Questions: 1. What do we mean by cost behavior? 2. When activity increases, does the unit variable cost increase, decrease or remain the same? 3. When activity decreases, does the unit fixed cost increase, decrease or remain the same? 4. When activity decreases, does total variable cost increase, decrease or remain the same? 5. When activity increases, does total fixed cost increase, decrease or remain the same? 6. Define the following: a. Gross margin b. Contribution margin 7. What are...
1. In one-sample t test, the difference between the mean of your sample and μ increases....
1. In one-sample t test, the difference between the mean of your sample and μ increases. Will t-value and P-value will increase, decrease, get closer to zero, or farther from zero? 2. In a one sample t test, the variance of your sample increases. Will t-value and P-value will increase, decrease, get closer to zero, or farther from zero? 3. In a two sample t test, the difference between the means of your samples decreases. Will t-value and P-value will...
True or false: 1. When constructing a confidence interval for a sample Mean, the t distribution...
True or false: 1. When constructing a confidence interval for a sample Mean, the t distribution is appropriate whenever the sample size is small. 2. The sampling distribution of X (X-bar) is not always a normal distribution. 3. The reason sample variance has a divisor of n-1 rather than n is that it makes the sample standard deviation an unbiased estimate of the population standard deviation. 4. The error term is the difference between the actual value of the dependent...
1)  Suppose that the fiscal multiplier is the larger one (HINT: use the IS curve with multiplier)....
1)  Suppose that the fiscal multiplier is the larger one (HINT: use the IS curve with multiplier). Does it help or hurt the government’s ability to use fiscal policy? Why? Do you think the fiscal multiplier is expected to be high in a liquidity trap scenario? Explain why. 2) assume that the central bank follows a standard version of the Taylor rule such that when an increase in inflation is detected, the Central Bank automatically increases interest rates to control it....
1.) Differentiate between mutation and substitution. 2.) Which are more common: silent, or replacement substitutions, and...
1.) Differentiate between mutation and substitution. 2.) Which are more common: silent, or replacement substitutions, and why? 3.) Explain what the neutral theory of molecular evolution is and why it is so valuable. 4.) Explain what codon bias is, and what pattern we see regarding it. 5.) What is the most common form of nonrandom mating, and why does it cause a decrease in heterozygosity? 6.) Explain the steps that lead to an extinction vortex.
Explean: 1-When connecting a button to Arduino, explain why a pull down resistor is required for...
Explean: 1-When connecting a button to Arduino, explain why a pull down resistor is required for correct operation? 2-digitalWritre (pin, state): have mention what type of value the variable state and pin can take? 3-Briefly explain the purpose of setup()and loop()function in an Arduino program? 4-Briefly explain what comparator does? 5- Briefly explain how button debouneing can affect the input read from Arduino?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT