All of the following will cause an identification challenge except for what?
A) A control variable is correlated with the error term.
B) The treatment variable is correlated with the error term.
C) Perfect multicollinearity
D) Imperfect multicollinearity

Question

Quizplus · Accepted Answer

Imperfect multicollinearity, while it can cause issues with the precision of the estimates and make the model less efficient, does not inherently cause an identification problem. Identification issues arise when the model cannot distinctly estimate the parameters due to problems like perfect multicollinearity (C), where one variable is an exact linear combination of another, or when variables are correlated with the error term (A and B), which violates the assumption of exogeneity necessary for causal inference.

All of the Following Will Cause an Identification Challenge Except