Question 1

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. C

Question 2

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 C

Question 3

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. C

Question 4

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.

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

A data set is called an unbalanced panel if it has missing years for at least some cross-sectional units in the sample.

Accepted Answer

A) True 
 B)False

Question 8

An economist wants to study the effect of income on savings. He collected data on 120 identical twins. Which of the following methods of estimation is the most suitable method, if income is correlated with the unobserved family effect?

Accepted Answer

A) Random effects estimation 
B) Fixed effects estimation 
C)  Ordinary least squares estimation 
D)  Weighted Least squares estimation 
A) Random effects estimation 
B) Fixed effects estimation 
C)  Ordinary least squares estimation 
D)  Weighted Least squares estimation

Question 9

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 10

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 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a difference between a fixed effects estimator and a first-difference estimator?

Accepted Answer

A) The fixed effects estimators are always larger than the first difference estimators in a two-period panel data analysis. 
B) The fixed effects estimator is more efficient than the first-difference estimator when the idiosyncratic errors are serially uncorrelated. 
C)  The first difference estimator is more sensitive to nonnormality and heteroskedasticity. 
D)  The bias in the first difference estimator depends on the time period (T) of analysis while the bias in the fixed effect does not depend on T. 
A) The fixed effects estimators are always larger than the first difference estimators in a two-period panel data analysis. 
B) The fixed effects estimator is more efficient than the first-difference estimator when the idiosyncratic errors are serially uncorrelated. 
C)  The first difference estimator is more sensitive to nonnormality and heteroskedasticity. 
D)  The bias in the first difference estimator depends on the time period (T) of analysis while the bias in the fixed effect does not depend on T.

Question 16

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 17

To obtain an estimator that reproduces the fixed effects estimates on the time-varying explanatory variables, _____.

Accepted Answer

A) ​one must check whether the time-demeaning allows one to interpret the estimates 
B) ​one must check whether time-constant variables can be included in the fixed effects 
C)  ​one must be able to interpret the time variations 
D)  ​one must be careful in constructing the time averages 
A) ​one must check whether the time-demeaning allows one to interpret the estimates 
B) ​one must check whether time-constant variables can be included in the fixed effects 
C)  ​one must be able to interpret the time variations 
D)  ​one must be careful in constructing the time averages

Question 18

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 19

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 20

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

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

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, _____.

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:

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

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

A data set is called an unbalanced panel if it has missing years for at least some cross-sectional units in the sample.

An economist wants to study the effect of income on savings. He collected data on 120 identical twins. Which of the following methods of estimation is the most suitable method, if income is correlated with the unobserved family effect?

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

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

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

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

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

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

Which of the following is a difference between a fixed effects estimator and a first-difference estimator?

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.

To obtain an estimator that reproduces the fixed effects estimates on the time-varying explanatory variables, _____.

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

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

The random effects approach _____.

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: Binary or Dummy Variables

Heteroskedasticity

More on Specification and Data Problems

Basic Regression Analysis With Time Series Data

Further Issues in Using Ols With Time Series Data

Serial Correlation and Heteroskedasticity in Time Series Regressions

Pooling Cross Sections Across Time: Simple Panel Data Methods

Instrumental Variables Estimation and Two Stage Least Squares

Simultaneous Equations Models

Limited Dependent Variable Models and Sample Selection Corrections

Advanced Time Series Topics

Carrying Out an Empirical Project

Filters

Exam 14: Advanced Panel Data Methods

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

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, _____.

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:

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

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

A data set is called an unbalanced panel if it has missing years for at least some cross-sectional units in the sample.

An economist wants to study the effect of income on savings. He collected data on 120 identical twins. Which of the following methods of estimation is the most suitable method, if income is correlated with the unobserved family effect?

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

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

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

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

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

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

Which of the following is a difference between a fixed effects estimator and a first-difference estimator?

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.

To obtain an estimator that reproduces the fixed effects estimates on the time-varying explanatory variables, _____.

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

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

The random effects approach _____.

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: Binary or Dummy Variables

Heteroskedasticity

More on Specification and Data Problems

Basic Regression Analysis With Time Series Data

Further Issues in Using Ols With Time Series Data

Serial Correlation and Heteroskedasticity in Time Series Regressions

Pooling Cross Sections Across Time: Simple Panel Data Methods

Instrumental Variables Estimation and Two Stage Least Squares

Simultaneous Equations Models

Limited Dependent Variable Models and Sample Selection Corrections

Advanced Time Series Topics

Carrying Out an Empirical Project

Filters

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

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

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