Question: If Corr( u t , p e t-3 ) 0 If Corr( u t , u t-1 ) 0 For questions a-e, please provide the

  1. If Corr(ut, pet-3) 0
  2. If Corr(ut, ut-1) 0

For questions a-e, please provide the answers for each of the 2 scenarios above. Thank you.

  1. Does this violate contemporaneous exogeneity?
  2. Does this violate strict exogeneity?
  3. Will our resulting OLS estimates be unbiased or biased?
  4. Will our estimate of the variance of the error term be unbiased or biased?
  5. Will our hypothesis testing be valid or invalid?

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