Econometrics Jeopardy Exam 2

Roots in the Ground

100

This is the name of a variable that is either true or false.

What is a dummy/dichotomous/indicator variable?

200

This is why we use a reference category?

What is avoiding the dummy variable trap?

300

This is an ordinal variable.

What is a variable that expresses rank but not magnitude?

400

This is how one writes the restricted model.

What is assume the null hypothesis?

500

These are the conditions for OLS to be BLUE.

1. The conditional distribution of e_i given X_i has a zero mean

2. X_i and Y_i are independently and identically distributed (i.i.d.)

3. Large outliers are unlikely

4. Errors are homoskedastic

Number Time

100

This is the tool used to test joint hypotheses.

What is an F-test?

200

This is your T-stat if:

H₀: B₀=0, H_A: B₀!=0

B_1-hat = 4, SE = 2

Alpha = 5%

What is T = 2?

300

Standardize the following subset of X_i:

X_4,5,6 = {2, -3, 8}

sd(X) = 4

mean(X) = 3

What is {-0.25, -1.5, 1.25}

400

Given the model:

grade_{i =} 20+7study_i+4study_i²-0.5study_i³

A 1-hour increase in hours studied from 3 to 4 has this much of an expected increase in grade.

What is 23.5?

(80-63.5)

500

These are the restricted and unrestricted models for a joint test of significance on B₁ and B₂.

Y_i= B₀+B₁X_1i+B₂X_2i+B₃X_3i+e_i

What are,

U: Y_i= B₀+B₁X_1i+B₂X_2i+B₃X_3i+e_i

R: Y_i= B₀+B₃X_3i+e_i?

I'm Not a Dummy

100

ahe_i-hat= 10-2age_i-1.25female_i

This is the interpretation for the coefficient on female.

What is, on average, females earn $1.25/hr less than males?

200

Y_i= B₀+B₁X_1i+B₂D_i+B₃(D_i x X_1i)+e_i

For the above model, these coefficients are statistically significant to have different intercepts and different slopes.

What is B₂ and B₃?

300

This is the interpretation of the coefficient on south.

Region | ahe   

NE       | 2.02  

MidW   | -1.59 

South  | -2.13 

West   |          

Const  | 12.50 

What is, on average, people who live in the south earn $2.13/hr less than those who live in the west?

400

Y_i= B₀+B₁X_1i+B₂D_i+B₃(D_i x X_1i)+e_i

For the above model, these coefficients are statistically significant to have the same intercepts and different slopes.

What is B_3?

500

ahe_i-hat= 3.31+3.60female_i+0.59age_i-0.30(age_i x female_i)

This is the meaning of the effect of female on average hourly earnings.

What is, on average, women initially earn more than men but see their salaries increase more slowly over time?

Feel the Loga-Rhythm

100

This is what you call a model with a logarithmic X variable and a linear Y variable.

What is a lin-log model?

200

This type of model is appropriate for measuring elasticity.

What is a log-log model?

300

This is the interpretation for a lin-log model with B₁ = 112.

What is a 1% increase in X being associated with a 1.12-unit change in Y, on average?

400

This is the interpretation for a log-log model with B₁ = 3.14.

What is a 1% increase in X is associated with a 3.14% increase in Y, on average?

500

This is how you compare the R² of a log-lin model with a lin-lin model.

What is no comparison?

Bias Awareness

100

These are the two conditions for omitted variable bias.

corr(X₁,X₂) != 0

B₂ != 0 (corr(X₂,Y) != 0)

200

This is what happens to your B₁ when B₂>0 and corr(X₁,X₂) = 0.

What is no bias?

300

This is what happens to your B₁ when B₂<0 and corr(X₁,X₂) > 0.

What is an understated estimate?

400

This is what happens to your B₁ when B₂<0 and corr(X₁,X₂) < 0.

What is an overstated estimate?

500

This is the reason for choosing a model form.

BONUS

This is not a valid reason for choosing a model form.

What is economic theory or economic intuition?

BONUS

What is comparing R² between models with different dependent variables?