State whether the following statements are true or false. Breifly justify your a
ID: 1187939 • Letter: S
Question
State whether the following statements are true or false. Breifly justify your answer:
9) When autocorrelation is present, OLS estimators are biased as well as inefficient;
10) The R squared values of two models, one involving regression in the first-difference form and another in the level form, are not directly comparable.
11) In the presence of heterscedasticity the usual OLS method always overestimates the standard errors of estimators.
12) If a regression model is mis-specified (e.g., an important variable is ommitted), the OLS residuals will show a distinct pattern.
13) In cases of high multicollinearity, it is not possible to assess the individual significance of one or more partial regression coefficients.
14) Multicollinearity is harmless if the objective of the analysis is prediction only.
Explanation / Answer
9. False, They are only inefficient because one can find an alternative regression technique that yields estimators with smaller variances.
10. True, but I dont know complete and exact reason for this.
11. Fale, standard errors are underestimated, giving a misleading impression of the precision of the OLS estimators.
12. True, low residual sum of square(R^2) value will be visible after the regression hence we can distinctly judge the OLS residual pattern.
13. False, if the no. of observations and the mean Square deviations of the explanatory variables are large, and the variance of the disturbance term is small, we may obtain good estimates.
14. True, as due to multicollinearity the sign of the co-efficients of the explanatory variables remains the same. Hence, we can still predict the direction of change in dependent variable due to change in explanatory variable.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.