Heteroskedastic-consistent standard errors, Applied Statistics

The following table shows the results of fitting a linear regression model of starting annual salaries on a constant, GPA (4 point scale), and a variable (Metrics =1) indicating whether the recent economics graduate took an econometrics course for a random sample of 50 recent economics graduates from a large state university. Note that econometrics was not required at this university.

1751_heteroskedastic-consistent standard errors.png

a. Can these results be used to predict what would happen if this university made econometrics a required course for economics students? (hint: consider the possibility of sample selection bias).

b. Suppose that econometrics is a very hard class, and the instructor is a very hard grader. What is the predicted change in starting salary for a student who has just taken econometrics, and this resulted in decreasing his GPA by .5 points. Give a 90% confidence interval for this prediction.  The covariance matrix of the estimated parameters are:

c. Note that the standard errors in the above regression are calculated assuming homoskedasticity.  Explain why we typically use heteroskedastic-consistent standard errors.

Posted Date: 3/13/2013 2:16:24 AM | Location : United States

Related Discussions:- Heteroskedastic-consistent standard errors, Assignment Help, Ask Question on Heteroskedastic-consistent standard errors, Get Answer, Expert's Help, Heteroskedastic-consistent standard errors Discussions

Write discussion on Heteroskedastic-consistent standard errors
Your posts are moderated
Related Questions
Use only the rare event rule, and make subjective estimates to determine whether events are likely. For example, if the claim is that a coin favors heads and sample results consis

Measurement of trend , least square method

Suppose that in the actual survey of 50 prospective customers, 6 subscribe to the 3 for all offer, what does this tell you about the previous estimate of the proportion of customer

We want to investigate the income data.  In the Excel file Midterm  Data.xls there is a tab labeled "Income Data 2006".  The data in the tab is the income reported by 400 people in

You have an assembly line which produces 1L bottles of seltzer with a standard deviation of 0.05L. • Assuming the distribution of volume is normal, what is the chance any single

The file Midterm Data.xls has a tab labeled "Income Data 2009". This data is collected income data from a sample of 400 people in 2009. Use a hypothesis test to see whether the av

What is an example of a real life situation when I would use each of these test

Read the “JET Copies” Case Problem on pages 678-679 of the text. Using simulation estimate the loss of revenue due to copier breakdown for one year, as follows: 1. In Excel, use a

Binomial Distribution Binomial distribution  was discovered by swiss mathematician James  Bernonulli, so this distribution is called as Bernoulli distribution also, this is a d