Consider the following regression equation specied for 2-period panel data: where i = 1; 2; :::N and t = 1; 2. If you expect that β_1 is positive, but the correlation between Δx_i and Δu_i is...


Consider the following regression equation specied for 2-period panel data:



where i = 1; 2; :::N and t = 1; 2. If you expect thatβ_1 is positive, but the correlation between Δx_i and Δu_i is negative, then
what is the bias in the OLS estimator ofβ_1 in the first-differenced equation?


Yit = Bo + Y1year2; + B1xit + a; + Uit<br>

Extracted text: Yit = Bo + Y1year2; + B1xit + a; + Uit

Jun 05, 2022
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