Continue with Exercise 13.21. Strictly for pedagogical purposes, assume that model (2) is the true demand function.

Question:

a. If we now estimate model (1), what type of specification error is committed in this instance?

b. What are the theoretical consequences of this specification error? Illustrate with the data at hand.

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Basic Econometrics

ISBN: 978-0073375779

5th edition

Authors: Damodar N. Gujrati, Dawn C. Porter

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Question Posted: May 29, 2018 03:01 AM

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Continue with Exercise 13.21. Strictly for pedagogical purposes, assume that model (2) is the true demand function.

Question:

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a This would be the case of i...View the full answer

Basic Econometrics

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