Question 1

The size of all the clusters obtained from a population are always the same.
​

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following assumptions is required for obtaining unbiased random effect estimators?

Accepted Answer

A) The idiosyncratic errors are heteroskedastic. 
B) The unobserved effect is independent of all explanatory variables in all time periods. 
C) The idiosyncratic errors are serially correlated. 
D) The unobserved effect is correlated with the explanatory variables. 
A) The idiosyncratic errors are heteroskedastic. 
B) The unobserved effect is independent of all explanatory variables in all time periods. 
C) The idiosyncratic errors are serially correlated. 
D) The unobserved effect is correlated with the explanatory variables. B

Question 3

Pooled ordinary least squares estimation is commonly applied to cluster samples when eliminating a cluster effect via fixed effects is infeasible or undesirable.

Accepted Answer

A) True 
 B)False  True

Question 4

In a random effects model, we assume that the unobserved effect is correlated with each explanatory variable.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a property of dummy variable regression?

Accepted Answer

A) This method is best suited for panel data sets with many cross-sectional observations. 
B) The R-squared obtained from this method is lower than that obtained from regression on time-demeaned data. 
C) The degrees of freedom cannot be computed directly with this method. 
D) The major statistics obtained from this method are identical to that obtained from regression on time-demeaned data. 
A) This method is best suited for panel data sets with many cross-sectional observations. 
B) The R-squared obtained from this method is lower than that obtained from regression on time-demeaned data. 
C) The degrees of freedom cannot be computed directly with this method. 
D) The major statistics obtained from this method are identical to that obtained from regression on time-demeaned data.

Question 6

The appropriate time average of {yit} is​   , where Ti is:

Accepted Answer

A) ​the dummy variable, which equals one when a complete set of data is observed. 
B) the total number of time periods for cross-sectional observation i.​ 
C) ​the total number of complete time periods for cross-sectional observation i. 
D) ​the explanatory variable for cross-sectional observation i. 
A) ​the dummy variable, which equals one when a complete set of data is observed. 
B) the total number of time periods for cross-sectional observation i.​ 
C) ​the total number of complete time periods for cross-sectional observation i. 
D) ​the explanatory variable for cross-sectional observation i.

Question 7

Which of the following assumptions is required for obtaining unbiased fixed effect estimators?

Accepted Answer

A) The errors are heteroskedastic. 
B) The errors are serially correlated. 
C) The explanatory variables are strictly exogenous. 
D) The unobserved effect is correlated with the explanatory variables. 
A) The errors are heteroskedastic. 
B) The errors are serially correlated. 
C) The explanatory variables are strictly exogenous. 
D) The unobserved effect is correlated with the explanatory variables.

Question 8

In the correlated random effects approach, the regression model includes _____.

Accepted Answer

A) time averages as separate explanatory variables 
B) at least one dummy variable 
C) more than one endogenous explanatory variable 
D) an instrumental variable 
A) time averages as separate explanatory variables 
B) at least one dummy variable 
C) more than one endogenous explanatory variable 
D) an instrumental variable

Question 9

The value of the estimated transformation parameter in generalized least square estimation that eliminates serial correlation in error terms indicates whether the estimates are likely to be closer to the pooled OLS or the fixed effects estimates.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of the correlated random effects approach (CRE)?

Accepted Answer

A) The CRE approach assumes that the unobserved effect is uncorrelated with the observed explanatory variables. 
B) The CRE approach cannot be used if the regression model includes a time-constant explanatory variable. 
C) The CRE approach considers that the unobserved effect is correlated with the average level of explanatory variables. 
D) The CRE estimate equals the random effects estimate. 
A) The CRE approach assumes that the unobserved effect is uncorrelated with the observed explanatory variables. 
B) The CRE approach cannot be used if the regression model includes a time-constant explanatory variable. 
C) The CRE approach considers that the unobserved effect is correlated with the average level of explanatory variables. 
D) The CRE estimate equals the random effects estimate.

Question 11

A pooled OLS estimator that is based on the time-demeaned variables is called the _____.

Accepted Answer

A) random effects estimator 
B) fixed effects estimator 
C) least absolute deviations estimator 
D) instrumental variable estimator 
A) random effects estimator 
B) fixed effects estimator 
C) least absolute deviations estimator 
D) instrumental variable estimator

Question 12

In a true cluster sample, the individuals are first drawn from the clusters.​

Accepted Answer

A) True 
 B)False

Question 13

The random effects approach _____.

Accepted Answer

A) cannot be used if the key explanatory variable is constant over time 
B) is preferred to pooled OLS because RE is generally more efficient 
C) is suitable if the Hausman test rejects the assumption that the unobserved effect is uncorrelated with the explanatory variables 
D) is more convincing than fixed effects for policy analysis using aggregate data 
A) cannot be used if the key explanatory variable is constant over time 
B) is preferred to pooled OLS because RE is generally more efficient 
C) is suitable if the Hausman test rejects the assumption that the unobserved effect is uncorrelated with the explanatory variables 
D) is more convincing than fixed effects for policy analysis using aggregate data

Question 14

Suppose that, in a fixed effects analysis, controlling for the policy intervention in the current time period, the next period's policy assignment predicts the outcome in the current period. This means that the research design is valid.

Accepted Answer

A) True 
 B)False

Question 15

The estimator obtained through regression on quasi-demeaned data is called the _____.

Accepted Answer

A) random effects estimator 
B) fixed effects estimator 
C) hetroskedasticity-robust OLS estimator 
D) instrumental variables estimator 
A) random effects estimator 
B) fixed effects estimator 
C) hetroskedasticity-robust OLS estimator 
D) instrumental variables estimator

Question 16

The random effects estimate is identical to the fixed effects estimate if the estimated transformation parameter ,   , in generalized least squares estimation that eliminates serial correlation between error terms is, _____.

Accepted Answer

A) less than zero 
B) equal to zero 
C) equal to one 
D) greater than one 
A) less than zero 
B) equal to zero 
C) equal to one 
D) greater than one

Question 17

The correlated random effects approach cannot be applied to models with many time-varying explanatory variables.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a reason for using the correlated random effects approach?

Accepted Answer

A) It provides unbiased and consistent estimators when the idiosyncratic errors are serially correlated. 
B) It provides unbiased and consistent estimators when the idiosyncratic errors are heteroskedastic. 
C) It provides a more efficient estimate than the fixed effects approach. 
D) It provides a way to include time-constant explanatory variables in a fixed effects analysis. 
A) It provides unbiased and consistent estimators when the idiosyncratic errors are serially correlated. 
B) It provides unbiased and consistent estimators when the idiosyncratic errors are heteroskedastic. 
C) It provides a more efficient estimate than the fixed effects approach. 
D) It provides a way to include time-constant explanatory variables in a fixed effects analysis.

Question 19

Which of the following statements is true?

Accepted Answer

A) Fixed effects estimation is not suitable when the unobserved cluster effect is correlated with one or more explanatory variables. 
B) Fixed effects approach is not applicable if the key explanatory variables change only at the level of the cluster. 
C) The ordinary least squares standard errors are incorrect when there is cluster effect. 
D) Random effects estimation can be applied to a cluster sample only if the unobserved cluster effect is correlated with one or more explanatory variables. 
A) Fixed effects estimation is not suitable when the unobserved cluster effect is correlated with one or more explanatory variables. 
B) Fixed effects approach is not applicable if the key explanatory variables change only at the level of the cluster. 
C) The ordinary least squares standard errors are incorrect when there is cluster effect. 
D) Random effects estimation can be applied to a cluster sample only if the unobserved cluster effect is correlated with one or more explanatory variables.

Question 20

A manufacturing company is sampled from a population of manufacturing companies, and then the data on at least two employees are recorded. This is an example of:

Accepted Answer

A) ​matched pair samples. 
B) ​random samples. 
C) ​cluster samples. 
D) ​nonrandom samples. 
A) ​matched pair samples. 
B) ​random samples. 
C) ​cluster samples. 
D) ​nonrandom samples.

The size of all the clusters obtained from a population are always the same.

Which of the following assumptions is required for obtaining unbiased random effect estimators?

Pooled ordinary least squares estimation is commonly applied to cluster samples when eliminating a cluster effect via fixed effects is infeasible or undesirable.

In a random effects model, we assume that the unobserved effect is correlated with each explanatory variable.

Which of the following is a property of dummy variable regression?

The appropriate time average of {y_it} is , where T_i is:

Which of the following assumptions is required for obtaining unbiased fixed effect estimators?

In the correlated random effects approach, the regression model includes _____.

The value of the estimated transformation parameter in generalized least square estimation that eliminates serial correlation in error terms indicates whether the estimates are likely to be closer to the pooled OLS or the fixed effects estimates.

Which of the following is true of the correlated random effects approach (CRE)?

A pooled OLS estimator that is based on the time-demeaned variables is called the _____.

In a true cluster sample, the individuals are first drawn from the clusters.

The random effects approach _____.

Suppose that, in a fixed effects analysis, controlling for the policy intervention in the current time period, the next period's policy assignment predicts the outcome in the current period. This means that the research design is valid.

The estimator obtained through regression on quasi-demeaned data is called the _____.

The random effects estimate is identical to the fixed effects estimate if the estimated transformation parameter , , in generalized least squares estimation that eliminates serial correlation between error terms is, _____.

The correlated random effects approach cannot be applied to models with many time-varying explanatory variables.

Which of the following is a reason for using the correlated random effects approach?

Which of the following statements is true?

A manufacturing company is sampled from a population of manufacturing companies, and then the data on at least two employees are recorded. This is an example of:

The Nature of Econometrics and Economic Data

The Simple Regression Model

Multiple Regression Analysis Estimation

Multiple Regression Analysis Inference

Multiple Regression Analysis Ols Asymptotics

Multiple Regression Analysis Further Issues

Multiple Regression Analysis With Qualitative Information

Heteroskedasticity

More on Specification and Data Issues

Basic Regression Analysis With Time Series Data

Further Issues in Using Ols With Time Sries Data

Serial Correlation and Heteroskedasticity in Time Series Regressions

Pooling Cross Sections Across Time Simple Panel Data Methods

Instrumental Variables Estimation and Two Strage Least Squares

Simultaneous Equations Models

Limited Dependent Variable Models and Sample Selection Correctons

Advanced Time Series Topics

Carrying Out an Empirical Project

Filters

Exam 14: Advanced Panel Data Methods

The size of all the clusters obtained from a population are always the same. ​

Which of the following assumptions is required for obtaining unbiased random effect estimators?

Pooled ordinary least squares estimation is commonly applied to cluster samples when eliminating a cluster effect via fixed effects is infeasible or undesirable.

In a random effects model, we assume that the unobserved effect is correlated with each explanatory variable.

Which of the following is a property of dummy variable regression?

The appropriate time average of {yit} is​ , where Ti is:

Which of the following assumptions is required for obtaining unbiased fixed effect estimators?

In the correlated random effects approach, the regression model includes _____.

The value of the estimated transformation parameter in generalized least square estimation that eliminates serial correlation in error terms indicates whether the estimates are likely to be closer to the pooled OLS or the fixed effects estimates.

Which of the following is true of the correlated random effects approach (CRE)?

A pooled OLS estimator that is based on the time-demeaned variables is called the _____.

In a true cluster sample, the individuals are first drawn from the clusters.​

The random effects approach _____.

Suppose that, in a fixed effects analysis, controlling for the policy intervention in the current time period, the next period's policy assignment predicts the outcome in the current period. This means that the research design is valid.

The estimator obtained through regression on quasi-demeaned data is called the _____.

The random effects estimate is identical to the fixed effects estimate if the estimated transformation parameter , , in generalized least squares estimation that eliminates serial correlation between error terms is, _____.

The correlated random effects approach cannot be applied to models with many time-varying explanatory variables.

Which of the following is a reason for using the correlated random effects approach?

Which of the following statements is true?

A manufacturing company is sampled from a population of manufacturing companies, and then the data on at least two employees are recorded. This is an example of:

The Nature of Econometrics and Economic Data

The Simple Regression Model

Multiple Regression Analysis Estimation

Multiple Regression Analysis Inference

Multiple Regression Analysis Ols Asymptotics

Multiple Regression Analysis Further Issues

Multiple Regression Analysis With Qualitative Information

Heteroskedasticity

More on Specification and Data Issues

Basic Regression Analysis With Time Series Data

Further Issues in Using Ols With Time Sries Data

Serial Correlation and Heteroskedasticity in Time Series Regressions

Pooling Cross Sections Across Time Simple Panel Data Methods

Instrumental Variables Estimation and Two Strage Least Squares

Simultaneous Equations Models

Limited Dependent Variable Models and Sample Selection Correctons

Advanced Time Series Topics

Carrying Out an Empirical Project

Filters

The size of all the clusters obtained from a population are always the same.

The appropriate time average of {y_it} is , where T_i is:

In a true cluster sample, the individuals are first drawn from the clusters.