Econ 251 Problem Set #8 SOLUTIONS | Download for quality grades |

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This problem set introduces you to random experiments and instrumental variable estimation. Instructions: Following each question, please handwrite or type your answers and copy/paste the STATA ... output (please, use the ‘copy as picture’ option). Part I Random experiments A. Conceptual questions (Based on Stock&Watson - Introduction to Econometrics) For this part STATA is not needed 1. How would you design a hypothetical random experiment to study the effect of hours of study per day on students’ performance on calculus exams in college? Would you obtain a consistent estimate of the effect you are after from this experiment? Explain. Suggest some potential problems and setback in implementing such an experiment in practice. 2. How would you design a hypothetical random experiment to study the effect of wearing a mandatory seatbelt laws on highway traffic fatalities? Would you obtain a consistent estimat [Show More]

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