Why should good non-sample information be incorporated into an econometric model via restricted least squares?
A)it reduces the variance of estimated coefficients without introducing bias
B)it allows more precise hypotheses testing to be done
C)it reduces the degrees of freedom in the denominator of an F-test
D)It reduces the probability of rejecting a true null hypothesis

Question

Quizplus · Accepted Answer

Incorporating good non-sample information into an econometric model via restricted least squares can help reduce the variance of estimated coefficients without introducing bias. This can lead to more precise and accurate estimation of the coefficients and improved model predictions.

Why Should Good Non-Sample Information Be Incorporated into an Econometric