The Probability Limit of the OLS Estimator in the Case

question 34

Essay

The probability limit of the OLS estimator in the case of omitted variables is given in your text by the following formula: $\hat { \beta } _ { 1 } \stackrel { p } { \rightarrow } \hat { \beta } _ { 1 } + \rho _ { \mathrm { X } } \frac { \sigma _ { u } } { \sigma _ { \mathrm { X } } }$ Give an intuitive explanation for two conditions under which the bias will be small.

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Definitions:

Bureaucracy's Goals

The objectives or aims pursued by a bureaucratic organization, typically including efficiency, predictability, and rationalization in the administration of public and private affairs.

Efficiency

The ability to achieve a desired outcome with the least waste of time, effort, or resources.

Primary Group

Small social groups characterized by close, personal, and enduring relationships, such as those among family, close friends, and peers.

Social Ties

The connections and relationships between individuals that form the fabric of society, providing support, community, and social interaction.