Suppose that the correct model for estimating a given relationship is: E[Y|D, X] = Bo +...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose that the correct model for estimating a given relationship is: E[Y₁|D₁, X₁] = Bo + B1 Di + B₂X; + VD₁² However, instead of estimating the above regression, we estimate the model below: E[Y₁|D₁] = bo + b1D₁ + b₂Xi Note that Dj is a continuous variable which takes on a continuous set of values (e.g. D;> 0). What is omitted variable bias in this situation? Be specific and provide a formula. Suppose that the correct model for estimating a given relationship is: E[Y₁|D₁, X₁] = Bo + B1 Di + B₂X; + VD₁² However, instead of estimating the above regression, we estimate the model below: E[Y₁|D₁] = bo + b1D₁ + b₂Xi Note that Dj is a continuous variable which takes on a continuous set of values (e.g. D;> 0). What is omitted variable bias in this situation? Be specific and provide a formula.
Expert Answer:
Answer rating: 100% (QA)
The bias in this case would be that the coefficient on X would be underestimated ... View the full answer
Related Book For
Chemistry The Central Science
ISBN: 978-0321696724
12th edition
Authors: Theodore Brown, Eugene LeMay, Bruce Bursten, Catherine Murphy, Patrick Woodward
Posted Date:
Students also viewed these economics questions
-
Selected amounts from Trent Company's trial balance of 12/31/14 appear below: 1. Accounts Payable 160,000 2. Accounts Receivable 150,000 3. Accumulated DepreciationEquipment 200,000 4. Allowance for...
-
Prepare adjusting entries for the following transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No...
-
Prepare the current asset section based on the following alphabetized post-closing trial balance information at March 31, 2014, for Whiteagle Company: Account Accounts payable Accounts receivable...
-
Rocket Science A rocket has total mass Mi = 360 kg, including 330 kg of fuel and oxidizer. In interstellar space it starts from rest, turns on its engine at time t = 0, and puts out exhaust with...
-
Refer to Problem 5.60. In the same time period, 27% of the returns were for "buyer's remorse." a. What is the expected value, or mean, of the binomial distribution? b. What is the standard deviation...
-
Under the assumptions of Proposition 6.40, prove the following claims: (i) a rational bubble cannot restart once it bursts, i.e., \(\beta_{t}=0\) implies that \(\beta_{t+s}=0\) for all \(s \in...
-
Respondents Varsity Brands, Inc., Varsity Spirit Corporation, and Varsity Spirit Fashions & Supplies, Inc., design, make, and sell cheerleading uniforms. Respondents have obtained or acquired more...
-
Assume that the nation of Spain is small and unable to influence the Brazilian (world) price of steel. Spains supply and demand schedules are illustrated in Table. Assume that Brazils price is $400...
-
a) Your roommate heard that you took Fundamentals of Finance with Prof. Hasler and that you learnt about the idea of building a nest egg for your retirement. Your roommate has a crazy idea and asks...
-
Hasan Fareed, a 24-year-old college graduate, never took a personal finance class. He pays his bills on time, has managed to save a little in an investment account, and with the help of an...
-
cd a b The following game is proposed to you. A fair coin will be tossed repeatedly until a tail appears (the first tail will end the game). The pot starts at 1 and is doubled every time a head...
-
How do genetic and epigenetic factors influence metabolic phenotypes and contribute to metabolic heterogeneity among individuals, shaping susceptibility to metabolic diseases and therapeutic...
-
the commissioner of taxation has received additional information regarding a taxpayer indicating that they have not disclosed all of their assessable income. What type of assessment will be assessed...
-
Calculate the following. a. The future value of $460 eight years from now at 7 percent. (Round your final answer to 2 decimal places.) b. The future value of $500 saved each year for 7 years at 5...
-
Holding period and annual (investment) returns. Bohenick Classic Automobiles restores and rebuilds old classic cars. The company purchased and restored a classic 1957 Thunderbird convertible 5 years...
-
the policy at pina colada corp is to expense all office supplies at the time of purchase on the last day of the accounting period there are 1210 of unused office supplies on hand and the balance of...
-
A rectangular page in a text (with width x and length y) has an area of 24 in., top and bottom margins set at in., and left and right margins set at 1 in. The printable area of the page is the...
-
The Alert Company is a closely held investment-services group that has been very successful over the past five years, consistently providing most members of the top management group with 50% bonuses....
-
Considering the nonmetals, what is the relationship between the group number for an element (carbon, for example, belongs to group 4A; see the periodic table on the inside front cover) and the number...
-
Methanol (CH3OH) is used as a fuel in race cars. (a) Write a balanced equation for the combustion of liquid methanol in air. (b) Calculate the standard enthalpy change for the reaction, assuming...
-
How do you account for the observation that the alkali metals, like sodium and potassium, are soft enough to be cut with a knife?
-
Beginning in the 1920s, Russian physicist Pyotr Kapitza or Kapitsa (18941984, Nobel laureate in physics 1978) measured the Paschen-Back effect to an accuracy of 1 percent to 3 percent in various...
-
Consider transitions from a \({ }^{2} D\) state to a \(2 P\) state in the strong field PaschenBack regime. List all allowed transitions and show that there are only three different spectral lines.
-
What is the longest wavelength of the Paschen series spectrum? Would it be visible to the human eye?
Study smarter with the SolutionInn App