Consider the two-equation system y 1 = 1 x 1 + 1 , y 2
Question:
Consider the two-equation system
y1 = β1x1 + ε1,
y2 = β2x2 + β3x3 + ε2.
Assume that the disturbance variances and covariance are known. Now suppose that the analyst of this model applies GLS but erroneously omits x3 from the second equation. What effect does this specification error have on the consistency of the estimator of β1?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (7 reviews)
The algebraic result is a little tedious but straightforward The GLS estimator which is computed is ...View the full answer
Answered By
Patrick Busaka
I am a result oriented and motivated person with passion for challenges because they provide me an opportunity to grow professionally.
5.00+
38+ Reviews
58+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
Consider a stock St and a plain vanilla, at-the-money, put option written on this stock. The option expires at time t + , where denotes a small interval. At time t, there are only two possible ways...
-
Consider the following LP problem developed at Jeff Spencers San Antonio optical scanning firm: Maximize profit = $1X1 + $1X2 Subject to: 2X1 + 1X2 100 1X1 + 2X1 100 (a) What is the optimal...
-
Consider the ellipse x2/192 + y2/52 = 1. Determine the sides a and b of the rectangle with the largest area that can be enclosed by the ellipse.
-
We consider and simulate the supply chain under a wholesale price contract. As mentioned, we use a retail price of $10, a unit production cost of $2.50, and a (monthly) demand that is normally...
-
For helium to release energy, should it be fissioned or fused?
-
Determine the magnitudes of the projected components of the force F in the direction of the cables AB and AC. Given: F = (60 12 -40) N a = 3 m b = 1.5 m c = 1 m d = 0.75 m e = 1 m B C F
-
Why has the importance of environmental accounting to business grown in the past ten years?
-
1. G. Johnson and colleagues have analyzed the MAP kinase cascade in which MEKK2 participates in mammalian cells. By a yeast two-hybrid screen (see Chapter 7), MEKK2 was found to bind MEK5, which can...
-
Desa Sdn Bhd (DSB) manufactures a single product known as COR7. Their records show that there were 3,000 kg of raw materials at the beginning of the current period with a total value of RM4,650. The...
-
It is October 16, 2014, and you have just taken over the accounting work of Saskan Enterprises, whose annual accounting period ends each October 31. The company's previous accountant journalized its...
-
Some managers are known for their reliance on practical decision-making rules and processes, and they can be quite skeptical of decision rules that seem too theoretical to be useful in practice....
-
The price elasticity of demand for imported whiskey is estimated to be 20.20 over a wide interval of prices. The federal government decides to raise the import tariff on foreign whiskey, causing its...
-
Oriole, Inc. is a large consumer Products Company, which manufactures health and beauty products sold at grocery and drug stores throughout the country. One division, PS, does both manufacturing and...
-
Explain strategies to sight-read the nonverbal communication of others.
-
Rewrite these sentences to use active voice instead of passive. A. Plant tours and speeches by supply chain professionals are constantly being scheduled for SCMC club members to attend. B. A speech...
-
Think about a recent difficult conversation you had. Ideally, select a conversation that occurred in the workplace or at school. Based on this conversation, do the following: A. Summarize the...
-
Explain how self-awareness impacts the communication process.
-
In three to five paragraphs, describe three triggers that could lead to emotional hijacking for you. For each trigger, explain one or two strategies you can use to calm down and communicate...
-
Where on Earth might be a good place to find concentrated amounts of lithium salts?
-
D Which of the following is considered part of the Controlling activity of managerial accounting? O Choosing to purchase raw materials from one supplier versus another O Choosing the allocation base...
-
The exponential distribution has density f (x) = exp( x). How would you obtain a random sample of observations from an exponential population?
-
Derive the first order conditions for nonlinear least squares estimation of the parameters in (15-2). How would you estimate the asymptotic covariance matrix for your estimator of = (, )?
-
A sample of 100 observations produces the following sample data: y 1 = 1, y 2 = 2, y' 1 y 1 = 150, y 2 y 2 = 550, y 1 y 2 = 260. The underlying bivariate regression model is y 1 = + 1 , y 2 = + 2...
-
On March 1, 2017 Green Company purchased a new piece of equipment for 210,000 cash. On March 1 Green recorded the equipment purchase with a Debit to the Equipment account and a Credit to the Cash...
-
The price per share of your all-equity firm is $40, and there are 2M shares outstanding. Suppose that your firm issues $30M worth of debt. The debt has a face value of $30M, a coupon rate of 5...
-
Provide a detailed explanation explaining the importance of organizational politics in the workplace. I am providing two references that you can use in your response. Please provide the pros and cons...
Study smarter with the SolutionInn App