02 Jun Question Sample Exam You have 1 hour and 50 minutes.
Question
Sample Exam
You have 1 hour and 50 minutes.
There are total of 20 problems, each worth 5 points.
Part 1
Suppose you want to study the following model:
Incomei = 0 + 1Educationi + i
Incomei: Friend i’s monthly income after tax.
Educationi: Friend i’s years of education after high school.
And you have collected data based on a survey of your three friends:
Incomei 10 2 9
Educationi 7 0 8
(5%)(1) Calculate OLS estimator ^ 1OLS .
(5%)(2) Calculate R2.
(5%)(3) It is common knowledge in economic eld that Assumption III(no endogeneity)
in this model is violated, why? What is the consequence of endogeneity in this model?
Now from the paper we have discussed in class, you know that economists have attempted
using quarter of birth as instrumental variables. Therefore you collect new data of these three
friends for their quarter of birth(QBi):
QBi 1 3 2
(5%)(4) Calculate 2SLS estimator ^ 12SLS .
You know that panel data can also be used to solve endogeneity problem. Therefore ten
years later, you collect data on the same three friends again, now they have changed a bit:
Incomei 12 4 –
Educationi 9 2 –
The last column is missing because you lost contact with the third friend.
(5%)(5) What can you do to x this missing data issue? Is there any problem of your
remedy? Why or why not?
(5%)(6) Calculate standard xed eects estimator using your remedy.
(5%)(7) Recall that you also learned a plug-in solution for endogeneity problem. There-
fore you decided to use IQ as a proxy for your friends’ talent. What are the pros and cons
of including it into the equation?
(5%)(8) Suppose IQi = Talenti + ui, is Assumption III violated? Why or why not.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.