True/False/Uncertain. Please explain your answer. A. I have a panel data set wit

Question

True/False/Uncertain. Please explain your answer.

A. I have a panel data set with n=2000 and t=4. I decide to run the before and after comparison. But my boss says the fixed effect regression is better. My boss is right.

B. I am running a school district in Texas. I hear about results of an experiment in Massachusetts where they made school uniforms mandatory for randomly selected grades in particular elementary schools in various districts. they find that wearing uniforms had a large and significant positive effect on kids'test scores. I should use this to convince my board to implement the same policy. (Assum the estimates are internally valid for this question)

c. I am running the same school district in Texas. My school board includes an econometrician. He says that there is a problem with that study because the error terms were clustered He is right.

D. If I estimate a panel data model with entity fixed effects, any variable which only varies across time can no longer have its coefficient identified.

F Invalid instruments cause the two stage least squares estimates of the coefficients on the endogenous variables to be inconsistent.

G Instrumental variables works becasue the instrument breaks the correlation between X and u.

H Measurement error in an independent variable , X, caused biased and inconsistent estimates of betaX.

Explanation / Answer

A. I have a panel data set with n=2000 and t=4. I decide to run the before and after comparison. But my boss says the fixed effect regression is better. My boss is right.

FALSE

B. I am running a school district in Texas. I hear about results of an experiment in Massachusetts where they made school uniforms mandatory for randomly selected grades in particular elementary schools in various districts. they find that wearing uniforms had a large and significant positive effect on kids'test scores. I should use this to convince my board to implement the same policy. (Assum the estimates are internally valid for this question)

UNCERTAIN

c. I am running the same school district in Texas. My school board includes an econometrician. He says that there is a problem with that study because the error terms were clustered He is right.

TRUE

D. If I estimate a panel data model with entity fixed effects, any variable which only varies across time can no longer have its coefficient identified.

FALSE

F Invalid instruments cause the two stage least squares estimates of the coefficients on the endogenous variables to be inconsistent

UNCERTAIN

G Instrumental variables works becasue the instrument breaks the correlation between X and u.

FALSE

H Measurement error in an independent variable , X, caused biased and inconsistent estimates of betaX.

TRUE

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