Question: Suppose every city in Florida has a different fine for speeding and you estimated the following equation: (1) is the quantity of speeding in city

Suppose every city in Florida has a different fine for speeding and you estimated the following equation: (1) is the quantity of speeding in city c and year t, is the fine in city c and year t, and is the percent of the population that is male ages 16 to 24 in city c and year t. a. What do you expect the signs of and to be? Why? b. Do you expect to be unbiased? Why or why not? Now suppose 50 cites were randomly chosen to increase the fine by $30 and you estimate the following two equations. (2) (3) c. What is the difference between in equation 1 and in equation 3? d. Do you expect to be bigger or smaller than Explain. e. What are the two requirements for an instrument to be valid? f. Does the instrument in this example meet these qualifications? Explain

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Answer a For the signs of and We expect the sign of the coefficient of Fine to be negative This is because higher fines are typically associated with ... View full answer

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