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Exam 15: Instrumental Variables Estimation and Two Stage Least Squares

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Exam 1: The Nature of Econometrics and Economic Data25 Questionsadd course
Exam 2: The Simple Regression Model25 Questionsadd course
Exam 3: Multiple Regression Analysis: Estimation24 Questionsadd course
Exam 4: Multiple Regression Analysis: Inference25 Questionsadd course
Exam 5: Multiple Regression Analysis: Ols Asymptotics25 Questionsadd course
Exam 6: Multiple Regression Analysis: Further Issues25 Questionsadd course
Exam 7: Multiple Regression Analysis With Qualitative Information: Binary or Dummy Variables25 Questionsadd course
Exam 8: Heteroskedasticity25 Questionsadd course
Exam 9: More on Specification and Data Problems25 Questionsadd course
Exam 10: Basic Regression Analysis With Time Series Data24 Questionsadd course
Exam 11: Further Issues in Using Ols With Time Series Data25 Questionsadd course
Exam 12: Serial Correlation and Heteroskedasticity in Time Series Regressions25 Questionsadd course
Exam 13: Pooling Cross Sections Across Time: Simple Panel Data Methods25 Questionsadd course
Exam 14: Advanced Panel Data Methods25 Questionsadd course
Exam 15: Instrumental Variables Estimation and Two Stage Least Squares25 Questionsadd course
Exam 16: Simultaneous Equations Models25 Questionsadd course
Exam 17: Limited Dependent Variable Models and Sample Selection Corrections25 Questionsadd course
Exam 18: Advanced Time Series Topics25 Questionsadd course
Exam 19: Carrying Out an Empirical Project25 Questionsadd course
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If we focus only on consistency, it is necessarily better to use IV than OLS if the correlation between z and u is smaller than that between x and u.

(True/False)
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Question 21

Which of the following assumptions is known as exclusion restrictions?

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Question 22

Consider the following simple regression model y = Consider the following simple regression model y = <sub>0</sub> + <sub>1</sub>x<sub>1</sub> + u. Suppose z is an instrument for x. Which of the following conditions denotes instrument relevance? 0 + Consider the following simple regression model y = <sub>0</sub> + <sub>1</sub>x<sub>1</sub> + u. Suppose z is an instrument for x. Which of the following conditions denotes instrument relevance? 1x1 + u. Suppose z is an instrument for x. Which of the following conditions denotes instrument relevance?

(Multiple Choice)
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Question 23

If the instrumental variable estimator has an upward bias, the ordinary least square estimator always has a downward bias.

(True/False)
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Question 24

Consider the following simple regression model y = Consider the following simple regression model y = <sub>0</sub> + <sub>1</sub>x<sub>1</sub> + u. The variable z is a poor instrument for x if _____. 0 + Consider the following simple regression model y = <sub>0</sub> + <sub>1</sub>x<sub>1</sub> + u. The variable z is a poor instrument for x if _____. 1x1 + u. The variable z is a poor instrument for x if _____.

(Multiple Choice)
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