Consider the model below (model 2) Yit = ai D + X B + uit i=1,2,N;...

 

Transcribed Image Text:

Consider the model below (model 2) Yit = ai D + X B + uit i=1,2,N; t= 1,..., T uit = dife + Vit with viid(0,02) (2) Where XIt is vector of strictly exogenous variables on the ith cross section, D. is a n x 1 vector of observed common effects and f, is m x 1 vector of unobserved common effects. 5)What kind of econometric problem does occur according to error structure of the above model (model 2). 6) Which estimators allowing for the cross-section dependence can be used to estimate model 2. 7) Assuming that T is large relative to N how to test for cross section dependence. 8) Assuming that N is large relative to T how to test for cross section dependence. Consider the model below (model 2) Yit = ai D + X B + uit i=1,2,N; t= 1,..., T uit = dife + Vit with viid(0,02) (2) Where XIt is vector of strictly exogenous variables on the ith cross section, D. is a n x 1 vector of observed common effects and f, is m x 1 vector of unobserved common effects. 5)What kind of econometric problem does occur according to error structure of the above model (model 2). 6) Which estimators allowing for the cross-section dependence can be used to estimate model 2. 7) Assuming that T is large relative to N how to test for cross section dependence. 8) Assuming that N is large relative to T how to test for cross section dependence.

Answer rating: 100% (QA)

5 The econometric problem that occurs according to the error structure of model 2 is crosssection de... View the full answer