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Consider the Following Simple Regression Model Y = 0

question 21

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Consider the following simple regression model y = Consider the following simple regression model y = <sub>0</sub> + <sub>1</sub>x<sub>1</sub> + u. Suppose z is an instrument for x. Which of the following statements is true? A) The condition Cov(z,u) = 0 can be tested statistically. B) The condition Cov(z,x) 0 cannot be tested statistically. C) The instrumental variables estimator is always biased if Cov(x,u) 0. D) The ordinary least squares estimator is unbiased if Cov(x,u) 0 . 0 + Consider the following simple regression model y = <sub>0</sub> + <sub>1</sub>x<sub>1</sub> + u. Suppose z is an instrument for x. Which of the following statements is true? A) The condition Cov(z,u) = 0 can be tested statistically. B) The condition Cov(z,x) 0 cannot be tested statistically. C) The instrumental variables estimator is always biased if Cov(x,u) 0. D) The ordinary least squares estimator is unbiased if Cov(x,u) 0 . 1x1 + u. Suppose z is an instrument for x. Which of the following statements is true?

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