Question: Consider the panel data regression model with AR(1): Yit = Po + Xit1 + B2Yit-1+a; + uit, where (Bo, B1, B2) are constant parameters, xit

Consider the panel data regression model with AR(1): Yit = Po + Xit1 + B2Yit-1+a; + uit, where (Bo, B1, B2) are constant parameters, xit is the regressor that is time-varying, a, is the unobserved effect, and uit is the idiosyncratic error term. Which one of the following statements is correct? O a. The regressor xit is strictly exogenous. O b. The lag term yit-1 is uncorrelated with Uit-1- O c. The regressor Xit is uncorrelated with the unobserved effect aj. d. When the number of time periods is large, FE is less biased than FD. O, e. All of the listed answers are correct

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Mathematics Questions!

Consider the panel data regression model yit = Bo Xit1 ar Uit, where (B0, B1) are constant parameters, and Uit is the idiosyncratic error term. In this model, the reason we would implement a fixed...

Consider the panel data regression model y = Bo + XitB +aj+ Uit where (Bo, B1) are constant parameters, x; is the regressor that is time-varying, aj is the unobserved effect, and uit is the...

The Relative Efficiency of the Between Estimator with Respect to the Within Estimator. This is based on Baltagi (1999). Consider the simple panel data regression model yit = + xit + uit i = 1, 2, ....

Consider the basic panel data setup in which the population regression model is given by Yit = Bo + B1Xit + ai + Uit (1) for i E {1, 2, ..., n},t E {1, 2, ...,T} and where we assume Ea;] = 0 (because...

The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow. V:;er:ls(;y...

Here is the quention This part asks a series of questions about the relationship between dthree, traffic death rates (number of traffic deaths per million miles driven), unem, unemployment rates, and...

Random effects and spatial autocorrelation with equal weights. This is based on Baltagi (2006). Consider the panel data regression model described in (13.1) with random individual effects and...

Suppose you have panel data from an experiment with 7 = 2 periods (so = = 1.2). Consider the panel data regression model with fixed individual and time effects and individual characteristics W; that...

Suppose that you have panel data from an experiment with T = 2 periods (so t = 1, 2). Consider the panel data regression model with fixed individual and time effects and individual characteristics Wi...

13.7 Suppose you have panel data from an experiment with T = 2 periods (so t = 1, 2). Consider the panel data regression model with fixed individual and time effects and individual characteristics Wi...

Explain the relationship between the effectiveness of monetary policy and the interest elasticity of money demand. Will monetary policy be more or less effective the higher the interest elasticity of...

Give a verbal definition of the term present value and illustrate it using a cash flow timeline with data from an example that you construct. As a part of your answer, explain why present values are...

1 . cash reconciliations can be tested via 2 . It is important to verify 3 . Cash confirmations need cutoff deviation disclosure existence payments

please answer only if you know programming language is c++ For this lab, your objective is to define the functions below. Define the void function SwapNodes () that takes three generic type Node...