Introduction to Econometrics 3rd Edition by James Stock, Mark Watson

تمرين 18

( Y i X 1i X 2i ) satisfy the assumptions in Key Concept 6.4. You are interested in ß 1 , the causal effect of X l on Y. Suppose that X 1 and W 2 are uncorrelated. You estimate ß 1 by regressing Y onto X 1 (so that X 2 is not included in the regression). Does this estimator suffer from omitted variable bias Explain.