Chat with AI
Introduction to Econometrics 3rd Edition by James Stock, James Stock
Edition 3ISBN: 978-9352863501Introduction to Econometrics 3rd Edition by James Stock, James Stock
Edition 3ISBN: 978-9352863501 Exercise 1
Consider the binary variable version of the fixed effects model in Equation (10.11), except with an additional regressor, Dl i ; that is, let 
a. Suppose that n = 3. Show that the binary regressors and the "constant" regressor are perfectly multicollinear; that is, express one of the variables D 1 i D2 i D 3 i and X 0,it as a perfect linear function of the others, where X 0,it , = 1 for all i, t.
b. Show the result in (a) for general n.
c. What will happen if you try to estimate the coefficients of the regression by OLS
a. Suppose that n = 3. Show that the binary regressors and the "constant" regressor are perfectly multicollinear; that is, express one of the variables D 1 i D2 i D 3 i and X 0,it as a perfect linear function of the others, where X 0,it , = 1 for all i, t.
b. Show the result in (a) for general n.
c. What will happen if you try to estimate the coefficients of the regression by OLS
Explanation
Verified
Verified
a) The following is the given regression...
Introduction to Econometrics 3rd Edition by James Stock, James Stock
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
