Multiple Choice
Consider the following simple regression model y=β0+ β1x1+ u.Suppose z is an instrument for x. Which of the following statements is true?
A) The condition Cov(z,u) = 0 can be tested statistically.
B) The condition Cov(z,x) ≠ 0 cannot be tested statistically.
C) The instrumental variables estimator is always biased if Cov(x,u) ≠0.
D) The ordinary least squares estimator is unbiased if Cov(x,u) ≠0.
Correct Answer:
Verified
Correct Answer:
Verified
Q3: Two stage least squares estimation cannot be
Q9: Which of the following assumptions is known
Q10: Consider the following simple regression model y=β<sub>0</sub>+
Q12: The order condition for identification of an
Q12: Which of the following assumptions is required
Q17: Consider the following simple regression model: y
Q20: The necessary condition for identification of an
Q22: The two stage least squares estimator is
Q27: Instrumental variables cannot be used for estimating
Q29: The test for overidentifying restrictions is valid