# Tag Info

4

Yes it is "allowed". Econometrically it is not a problem. The real question is how useful such a model is for your setting and that will depend on your exact research question, variables and data.

3

Actually there is no single agreed upon definition of low middle and high class. For example, Pew research center uses the following definitions: “Pew Research defines middle-income Americans as those whose annual household income is two-thirds to double the national median. For a family of three, that ranges from \$42,000 to \$126,000 in 2014 dollars. ...

3

The difference is that the first regression is unbiased only if you can assume that high school GPA and ACT score are orthogonal on each other $cov(x,z)=0$ where $x$ is shortcut for high school GPA and $z$ for ACT score. Or if you can assume the second variable ATC score does not affect the dependent variable at all $\beta_2=0$. This is because in simple ...

2

There are many methods to forecast exchange rates- look at the series of influential papers by Meese and Rogoff for a primer (https://scholar.harvard.edu/files/rogoff/files/51_jie1983.pdf). To answer your particular question- what you describe seems to be driven by multicollinearity. For instance, returns on stocks will be correlated with the inflation ...

2

Is there future for DSGE? Well, DSGE stands for dynamic stochastic general equilibrium models. You can’t really model time series appropriately without the dynamic stochastic part, and when it comes to general equilibrium there are economists who think that this approach does not really capture all interesting questions, as in many cases it might be more ...

2

I have spent three days thinking about how to answer your question. I still haven't really decided how it should be answered, so this answer is more in the way of a set of observations. I can readily imagine a formal treatment of general linear models or limited dependent variables models could do better than this answer. The first thing I would observe ...

1

It is allowed in a sense it does not violate any assumption of the OLS estimator but it is also unlikely that you would need such a specification for a model. If you include $log(x_2)$ in model specification that means you are trying to control for the fact that there is some exponential relationship between $y$ and $x$ like $y=x^b$ and taking logs of $x^b$ ...

1

a) not sure what exactly you mean here by probability distribution but if you mean the distribution of potential Y given the distribution of estimated coefficient b and a it would be correct, although usually we look at expectation to get single number than on distribution in which case it would be $E(Y|X)$ b) is correct

1

The word "noise" implies that there is error in the measurement of household debt, but there is no good reason to believe this is so. In fact, I argue that a finer time period would give you more detail, and a more accurate measurement of the correlation between two variables. You don't want to find a moving average because that throws away valuable ...

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