2. Omitted variable bias:a. What is omitted variable bias?b. What are the two necessary conditions for an omitted variable Z to result inomitted variable bias?c. Suppose we regress an outcome variable Y on an independent variable X, but weomit controlling for variable Z. How will the coefficient estimate for X be biasedin the following cases?i. Z is negatively correlated with both X and Yii. Z is positively correlated with both X and Yiii. Z positively correlated with X but negatively correlated with Yiv. Z negatively correlated with X but positively correlated with Yv. Z is not correlated with either X or Yvi. Z is positively correlated with X but not correlated with Y

c. Analysis of each case and its impact on the coefficient estimate for X: i) Z is negatively…

Answered: 2. Omitted variable bias: a. What is…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.16P

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