Consider the following generic fixed effects model, along with a two-period (t = 1, 2), randomly sampled panel data set with dependent variable y and independent variable x: Yit = Bo + 5o d24 + B1rit + ai +Uit where Yit = value of y for individual i at timet d2; = binary variable equal to 1 in the second time period (t = 2), and o otherwise (t = 1) Cit = value of a for individual i at time t a; = unobserved (time-invariant) effect Uj = idiosyncratic error Taking the first difference of the model (that is, subtracting the regression equation for t=1 from the regression equation for t=2) yields the following first-differenced equation: Note: Let A denote the change from t=1 to t = 2. Ay; = Yi2 – Yi1= So Au; You now plan to use OLS to estimate your first-differenced equation, in order to obtain the first-differenced estimator. Suppose that ait is a binary variable equal to 1 if the individual was born male, and o otherwise. True or False: The first-differenced estimator cannot be estimated in this case. O True O False
Consider the following generic fixed effects model, along with a two-period (t = 1, 2), randomly sampled panel data set with dependent variable y and independent variable x: Yit = Bo + 5o d24 + B1rit + ai +Uit where Yit = value of y for individual i at timet d2; = binary variable equal to 1 in the second time period (t = 2), and o otherwise (t = 1) Cit = value of a for individual i at time t a; = unobserved (time-invariant) effect Uj = idiosyncratic error Taking the first difference of the model (that is, subtracting the regression equation for t=1 from the regression equation for t=2) yields the following first-differenced equation: Note: Let A denote the change from t=1 to t = 2. Ay; = Yi2 – Yi1= So Au; You now plan to use OLS to estimate your first-differenced equation, in order to obtain the first-differenced estimator. Suppose that ait is a binary variable equal to 1 if the individual was born male, and o otherwise. True or False: The first-differenced estimator cannot be estimated in this case. O True O False
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
Related questions
Question

Transcribed Image Text:Consider the following generic fixed effects model, along with a two-period (t = 1, 2), randomly sampled panel data set with dependent variable y and
independent variable x:
Yit = Bo + 5o d24 + B1rit + ai +Uit
where
Yit = value of y for individual i at timet
d2; = binary variable equal to 1 in the second time period (t = 2), and o otherwise (t = 1)
Cit = value of a for individual i at time t
a; = unobserved (time-invariant) effect
Uj = idiosyncratic error
Taking the first difference of the model (that is, subtracting the regression equation for t=1 from the regression equation for t=2) yields the following
first-differenced equation:
Note: Let A denote the change from t=1 to t = 2.
Ay; = Yi2 – Yi1=
So
Au;
You now plan to use OLS to estimate your first-differenced equation, in order to obtain the first-differenced estimator. Suppose that ait is a binary
variable equal to 1 if the individual was born male, and o otherwise.
True or False: The first-differenced estimator cannot be estimated in this case.
O True
O False
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images

Recommended textbooks for you

MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc

Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning

Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning

MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc

Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning

Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning

Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON

The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman

Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman