(Yi, Xi, X2i) satisfy the assumptions in Key Concept 6 4 You are interested in 1, the causal effect of X1 on Y Suppose that X1 and X2 are uncorrelated You estimate by 1 regressing Y onto X1 (so that X2 is not included in the regression) Does this estimator suffer from omitted variable bias Explain

Question: (Yi, Xi, X2i) satisfy the assumptions in Key Concept 6.4. You are interested in 1, the causal effect of X1 on Y. Suppose that X1

(Yi, Xi, X2i) satisfy the assumptions in Key Concept 6.4. You are interested in β1, the causal effect of X1 on Y. Suppose that X1 and X2 are uncorrelated. You estimate by β1 regressing Y onto X1 (so that X2 is not included in the regression). Does this estimator suffer from omitted variable bias? Explain.

Step by Step Solution

★★★★★

3.38 Rating (173 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

For omitted variable bias to occur two conditions must be t... View full answer

Question Has Been Solved by an Expert!

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

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

909-M-S-L-R (8225).docx

120 KBs Word File

Students Have Also Explored These Related Statistics Questions!

Suppose that (Yi, Xi) satisfy the assumptions in Key Concept 4.3 and, in addition, ui is N(0, 2u) and is independent of Xi. (a) Is pi conditionally unbiased? (b) Is pi the best linear conditionally...

Suppose that (Yi, Xi) satisfy the assumptions in Key Concept 4.3. A random sample of size n = 250 is drawn and yields = 5.4 + 3.2X, R2 = 0.26, SER = 6.2. (3.1) (1.5) (a) Test H0: i = 0 vs. H1: 1 0...

Consider the regression model Yi = Xi + ui, where ui and Xi{ satisfy the assumptions in Key Concept 4.3. Let denote an estimator of that is constructed as = /, where and are the sample means of...

6.9 (Yi, X1i, X2i) satisfy the assumptions in Key Concept 6.4. You are interested in b1, the causal effect of X1 on Y. Suppose that X1 and X2 are uncorrelated. You estimate b1 by regressing Y onto X1...

6.10 (Yi, X1i, X2i) satisfy the assumptions in Key Concept 6.4; in addition, var(ui X1i, X2i) = 4 and var(X1i) = 6. A random sample of size n = 400 is drawn from the population. a. Assume that X1 and...

6.9 1Yi, X1i, X2i2 satisfy the assumptions in Key Concept 6.4. You are interested in b1, the causal effect of X1 on Y. Suppose X1 and X2 are uncorrelated. You estimate b1 by regressing Y onto X1 (so...

6. (Y;, X1, X3) satisfy the assumptions in Key Concept 6.4. You are interested in B, the causal effect of X; on Y. Suppose that X; and X, are uncorrelated. You estimate (3, by regressing Y onto X;...

(YXX) satisfy the assumptions in Key Concept 6.4. You are interested in B, the causal effect of X, on Y. Suppose that X, and X, are uncorrelated. You estimate 3, by regressing Y onto X, (so that X2...

$\left(Y_{i}, X_{1 i}, X_{2 i} ight)$ satisfy the assumptions in Key Concept 6.4; in addition, $\operatorname{var}\left(u_{i} \mid X_{1 i}, X_{2 i} ight)=4$ and \(\operatorname{var}\left(X_{1 i}...

6.10 1Yi, X1i, X2i2 satisfy the assumptions in Key Concept 6.4; in addition, var1ui X1i, X2i2 = 4 and var1X1i2 = 6. A random sample of size n = 400 is drawn from the population. a. Assume that X1...

Selected accounts of Conan Company are shown below. Instructions From an analysis of the T-accounts, reconstruct (a) The August transaction entries, (b) The adjusting journal entries that were made...

Compare and contrast the conduct of Guy Enright and Nick Day. Which of these individuals was most ethical (or least unethical)? Defend your answer.

1 . Super Computer Company's stock is selling for $ 1 0 0 per share today. It is expected that this stock will pay a dividend of 5 dollars per share, and then be sold for $ 1 2 0 per share at the end...

9. Fraud detection A credit card bank is investigating the incidence of fraudulent card use. The bank suspects that the type of product bought may provide clues to the fraud. To examine this...

Improving education in Afghanistan may be key to bringing development and stability to that country. In 2007 , only 37 percent of primary-schoolage children in Afghanistan attended schools, and there...

In their 2004 paper "Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," Marianne Bertrand and Sendhil Mullainathan discuss the results of...

We considered an experiment in which people were assigned to a treatment group that was encouraged to watch a television program on affirmative action. We will revisit that analysis, paying attention...

Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents $150,000 Accounts payable $250,000...

Assume the risk-free rate is 1%. The following table shows returns and variance-covariance for five stocks. Returns% Var-Cov IT ENG FIN HLT CDS IT 4.559 IT 8.129 7.182 7.171 3.585 7.041 ENG 7.187 ENG...

A stock had returns of 19 percent, 11 percent, 13 percent, -4 percent, 15 percent, and 11 percent over the last six years. What is the arithmetic return for the stock? What is the geometric return...