Define what an endogenous variable is, describe three scenarios that may cause a problem of endogeneity, and what are minimal assumptions needed for a good instrument.Tobit models are used to model censored and corner solution data. Explain what the difference between these two types of data is, and how does it affect the interpretation of Tobit models?What is the difference between a logit and a probit model, and why would are they preferred over a linear probability model (LPM)Explain what it means for a variable to possess a unit root. What are the implications for regression analysis if one uses variables with Unit roots?Explain what serial correlation is, how do you test for it, and why it invalidates the standard calculation of standard errors in time series data.Describe what does it mean to have a spurious regression, why could it happen, and what are the consequences in terms of t-statistics and goodness of fit measures?

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Answered: Define what an endogenous variable is,…

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Define what an endogenous variable is, describe three scenarios that may cause a problem of endogeneity, and what are minimal assumptions needed for a good instrument.
Tobit models are used to model censored and corner solution data. Explain what the difference between these two types of data is, and how does it affect the interpretation of Tobit models?
What is the difference between a logit and a probit model, and why would are they preferred over a linear probability model (LPM)
Explain what it means for a variable to possess a unit root. What are the implications for regression analysis if one uses variables with Unit roots?
Explain what serial correlation is, how do you test for it, and why it invalidates the standard calculation of standard errors in time series data.
Describe what does it mean to have a spurious regression, why could it happen, and what are the consequences in terms of t-statistics and goodness of fit measures?

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