Question: (Dummy Variables) In the TimeSeriesDummyVariable.xls file we set up a short regression in which we regressed Ice Cream Sales on Price only, ignoring the Coupon

(Dummy Variables) In the TimeSeriesDummyVariable.xls file we set up a “short regression” in which we regressed Ice Cream Sales on Price only, ignoring the Coupon dummy variable. Then we performed a Monte Carlo analysis; the average value of the estimated slope coefficient for Price in 1,000 repetitions was−742 and the SD was 42. This is fairly strong evidence of bias in the short regression.

Explain why the short regression estimate for Price is biased.

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