ECON 710 Midterm: ECON 710 UW Madison Midterm 2017a

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31 Jan 2019
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1. (a) bc = r0b(cid:12) (cid:6) zqr0bvb(cid:12)r =hr0b(cid:12) (cid:0) zqr0bvb(cid:12)r; (b) (cid:18)0 2 bc if (cid:12)(cid:12)(cid:12)r0b(cid:12) (cid:0) (cid:18)0(cid:12)(cid:12)(cid:12) (cid:20) zqr0bvb(cid:12)r or equivalently if jtj (cid:20) z where t =(cid:16)r0b(cid:12) (cid:0) (cid:18)0(cid:17) =qr0bvb(cid:12)r. N (0; 1) when (cid:18)0 is the true mean:the rule (cid:147)reject h0 if (cid:18)0 =2 bc(cid:148) is the same as (cid:147)reject h0 if jtj > z(cid:148). P (jn (0; 1)j > z) = 0:05: there are two possibilities. First, using the fwl theorem, b(cid:12) 1 = (x 0. 2x1 = 0: equivalently if pn e(cid:12) 1 = (x 0 under the same condition. 1y if m2x1 = x1 or x 0. 2y = 0 then all the coe cients equal zero and thus also equal one. Notice, this is a problem about the estimates, not about the population coe cients. + (cid:12) 2 (cid:0) 2(cid:12)b(cid:12), we have the relalationship (cid:0) (cid:12) 2 + 2(cid:12)b(cid:12) E(cid:16)b(cid:18)(cid:17) = e(cid:18)(cid:18)(cid:16)b(cid:12) (cid:0) (cid:12)(cid:17)2(cid:19)(cid:19) (cid:0) (cid:12) 2 + 2(cid:12)e(cid:16)b(cid:12)(cid:17)

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