Answer the following questions using the Winter Olympics data described in Table 15.1 that can be found
Question:
Answer the following questions using the Winter Olympics data described in Table 15.1 that can be found in olympics_HW.dta
(a) Investigate whether each of the independent variables varies within unit. Discuss how whether a variable varies within unit matters for fixed effects and random effects models.
(b) Estimate a pooled OLS model where the dependent variable is medals and the independent variables are population, GDP, host country, average temperature, and maximum elevation. Briefly comment on the results.
(c) Estimate a random effects model with the same variables as in part (b). Briefly explain the results, noting in particular what happens to variables that have no within-unit variation.
(d) What is necessary to avoid bias for a random effects model? Do you think this condition is satisfied in this case? Why or why not?
Table 15.1:
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Real Econometrics The Right Tools To Answer Important Questions
ISBN: 9780190857462
2nd Edition
Authors: Michael Bailey