Author Question: Misspecification of functional form of the regression function A) is overcome by adding the ... (Read 131 times)

c0205847

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Misspecification of functional form of the regression function
 
  A) is overcome by adding the squares of all explanatory variables.
  B) is more serious in the case of homoskedasticity-only standard error.
  C) results in a type of omitted variable bias.
  D) requires alternative estimation methods such as maximum likelihood.

Question 2

It is advisable to use clustered standard errors in panel regressions because
 
  A) without clustered standard errors, the OLS estimator is biased
  B) hypothesis testing can proceed in a standard way even if there are few entities (n is small)
  C) they are easier to calculate than homoskedasticity-only standard errors
  D) the fixed effects estimator is asymptotically normally distributed when n is large



Qarqy

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Answer to Question 1

Answer: C

Answer to Question 2

Answer: D



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