Suppose the U.S. Federal Reserve raised its interest rate by 1 percentage point between 2014 and 2015, but the Bank of Canada made no change in its interest rate. You estimate the following model in an attempt to assess the effect of the change in interest rate on the unemployment rate: Unemploymentit = β0 + β1U.S.it + β2Y2015it + β3U.S.it × Y2015it + Uit Here, U.S.it is a dummy variable equaling one if the observation is in the U.S. and Y2015it is a dummy variable equaling one if the observation is in 2015. Which of the following variables may generate an endogeneity problem when attempting to use the estimate for the diff-in-diff (β3) as the effect of the interest rate change?

A) Changes in the U.S. fiscal policy between 2014 and 2015 B) Changes in overall level of trade in North American between 2014 and 2015 C) The difference in average labor force participation between U.S. and Canada D) Changes in international immigration laws between 2014 and 2015 A) Changes in the U.S. fiscal policy between 2014 and 2015 B) Changes in overall level of trade in North American between 2014 and 2015 C) The difference in average labor force participation between U.S. and Canada D) Changes in international immigration laws between 2014 and 2015

Exam 8: Advanced Methods for Establishing Causal Inference

What object from the first stage regression (of two-stage least squares) is critical to incorporate in your implementation of the second stage regression?

(Multiple Choice)

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Question 21

Generally speaking, what are the methods available to the econometrician who wants to estimate a linear model with a fixed effects model design (i.e., dummy variable for individual units observed over multiple periods)?

(Multiple Choice)

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Question 22

In estimating the effect of price on sales (Sales_i = α₀ + α₁Price_i + U_i), you are attempting to find an instrumental variable that will solve the endogeneity problem caused by the confounding factor of number of competitors being within U_i, which is correlated with price. Which of the following statements would suggest that wholesale costs would satisfy the relevant condition to be a potential instrument variable?

(Multiple Choice)

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Question 23

Suppose the U.S. Federal Reserve raised its interest rate by 1 percentage point between 2014 and 2015, but the Bank of Canada made no change in its interest rate. You estimate the following model in an attempt to assess the effect of the change in interest rate on the unemployment rate: Unemployment_it = β₀ + β₁U.S._it + β₂Y2015_it + β₃U.S._it × Y2015_it + U_it Here, U.S._it is a dummy variable equaling one if the observation is in the U.S. and Y2015_it is a dummy variable equaling one if the observation is in 2015. Which of the following variables may generate an endogeneity problem when attempting to use the estimate for the diff-in-diff (β₃) as the effect of the interest rate change?

(Multiple Choice)

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Question 24

Which object from the first or second stage reports whether an instrument is exogenous?

(Multiple Choice)

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Question 25

When one uses within-group differences in variables to estimate parameters in the data generating process, you are using what approach?

(Multiple Choice)

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Question 26

Given the regression results Unemployment Rate_it = α + 0.8 (0.3) × Alabama_it - 0.4 (0.2) × South Carolina_it + 0.2 (0.3) × North Carolina_it + 0.4 (0.12)MinimumWage_it - 0.1 (0.1)Year_t, where the coefficients are reported with their standard errors in parenthesis, what might be a fact that would make you concerned about the interpretation of the coefficient on minimum wage as being causal?

(Multiple Choice)

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Question 27

When might it be the case that a difference-in-differences estimator still does not identify a consistent estimate of the causal treatment effect?

(Multiple Choice)

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Question 28

Which of the following scenarios might allow you to try and test the exogeneity condition of an instrumental variable empirically?

(Multiple Choice)

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Question 29

A potential upside of using within estimation besides the reduction in the number of parameters to be estimated is:

(Multiple Choice)

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Question 30

In estimating a regression model with an instrumental variable typically one of two methods is used to estimate the mode. The two methods are:

(Multiple Choice)

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Question 31

A potential downside of using within estimation is:

(Multiple Choice)

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Question 32

Given the role of cross sectional fixed effects in the empirical strategy for identifying causal effects, instead of conducting hypothesis tests of any one coefficient on a fixed effect being zero, it is typical to conduct what sort of hypothesis test?

(Multiple Choice)

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Question 33

Given the regression results Unemployment Rate_it = α + 0.8 (0.3) × Alabama_it - 0.4 (0.2) × South Carolina_it + 0.2 (0.3) × North Carolina_it + 0.4 (0.12)MinimumWage_it - 0.1 (0.1)Year_t, where the coefficients are reported with their standard errors in parenthesis, how should we interpret the coefficient for minimum wage?

(Multiple Choice)

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Question 34

In estimating a fixed effects model using panel data, which of the following variables will not be effective controls if you use a full set of (cross sectional) fixed effects for individuals?

(Multiple Choice)

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Question 35

In the context of regression analysis, a variable that allows us to isolate the causal effect of a treatment on an outcome due to its exogenous correlation with the treatment is known as a(n):

(Multiple Choice)

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Question 36

Typically, the justification for an instrumental variable will come from:

(Multiple Choice)

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Question 37

Suppose you've regressed profits across stores (i) in Indiana and Michigan over two years (t) on an Indiana dummy variable as well as on an interaction between an Indiana dummy variable and Year 2 dummy variable. Thus, your regression equation is: Profits_it = β₀ + β₁Indiana_it + β₂Year2_it Indiana_it + U_i. What is the marginal effect of a store being in Indiana based off this regression equation?

(Multiple Choice)

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Question 38

Fortunately, the difference-in-differences estimate of a treatment effect also can be reported/interpreted as:

(Multiple Choice)

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Question 39

A variable is exogenous if that variable:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 50

What object from the first stage regression (of two-stage least squares) is critical to incorporate in your implementation of the second stage regression?

Generally speaking, what are the methods available to the econometrician who wants to estimate a linear model with a fixed effects model design (i.e., dummy variable for individual units observed over multiple periods)?

Which object from the first or second stage reports whether an instrument is exogenous?

When one uses within-group differences in variables to estimate parameters in the data generating process, you are using what approach?

When might it be the case that a difference-in-differences estimator still does not identify a consistent estimate of the causal treatment effect?

Which of the following scenarios might allow you to try and test the exogeneity condition of an instrumental variable empirically?

A potential upside of using within estimation besides the reduction in the number of parameters to be estimated is:

In estimating a regression model with an instrumental variable typically one of two methods is used to estimate the mode. The two methods are:

A potential downside of using within estimation is:

Given the role of cross sectional fixed effects in the empirical strategy for identifying causal effects, instead of conducting hypothesis tests of any one coefficient on a fixed effect being zero, it is typical to conduct what sort of hypothesis test?

In estimating a fixed effects model using panel data, which of the following variables will not be effective controls if you use a full set of (cross sectional) fixed effects for individuals?

In the context of regression analysis, a variable that allows us to isolate the causal effect of a treatment on an outcome due to its exogenous correlation with the treatment is known as a(n):

Typically, the justification for an instrumental variable will come from:

Fortunately, the difference-in-differences estimate of a treatment effect also can be reported/interpreted as:

A variable is exogenous if that variable:

The Roles of Data and Predictive Analytics in Business

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Linear Regression As a Fundamental Descriptive Tool

Correlation Vs Causality in Regression Analysis

Basic Methods for Establishing Causal Inference

Prediction for a Dichotomous Variable

Identification and Data Assessment

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