where cov(Z, v) Suppose we have the following causal model Y = 3 +5Z+v, 0. However, a precise measure of Z is not available. Instead, we have a noisy measure X of Z, that is, X = Z + w with var(w) > 0. Suppose the error w is a classical measurement error so that cov(w, Z) = cov(w, v) = 0. What can you conclude about the limit of the OLS estimator, namely B = cov(X, Y)/var(X)? 3₁₁ = 0 B < 5 3* = 5 B < 0 OB₂ > 5 B > 0 O =
where cov(Z, v) Suppose we have the following causal model Y = 3 +5Z+v, 0. However, a precise measure of Z is not available. Instead, we have a noisy measure X of Z, that is, X = Z + w with var(w) > 0. Suppose the error w is a classical measurement error so that cov(w, Z) = cov(w, v) = 0. What can you conclude about the limit of the OLS estimator, namely B = cov(X, Y)/var(X)? 3₁₁ = 0 B < 5 3* = 5 B < 0 OB₂ > 5 B > 0 O =
Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.12P
Related questions
Question
Transcribed Image Text:=
3+5Z+v,
Suppose we have the following causal model Y
where cov(Z, v)
=
0. However, a precise measure of Z is not
available. Instead, we have a noisy measure X of Z, that is,
X = Z + w with var(w) > 0. Suppose the error w is a classical
measurement error so that cov(w, Z) = cov(w, v)
=
0. What
can you conclude about the limit of the OLS estimator, namely
ß₂2 = cov(X,
Y)/var(X)?
0 B² = 0
B < 5
3² = 5
B < 0
ß* > 5
OB > 0
U
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you