One of the following is a regression example for which Entity and Time Fixed Effects could be used: ________

a. minimum wages on teenage employment using annual data from the 48 contiguous states in 2006.
b. various performance statistics on the (log of) salaries of baseball pitchers in the American League and the National League in 2005 and 2006.
c. inflation and inflationary expectations on unemployment rates in the United States, using quarterly data from 1960-2006.
d. drinking alcohol on the GPA of 150 students at your university, controlling for incoming SAT scores.

Question

03-04-2021
Mathematics

contestada

One of the following is a regression example for which Entity and Time Fixed Effects could be used: ________

a. minimum wages on teenage employment using annual data from the 48 contiguous states in 2006.
b. various performance statistics on the (log of) salaries of baseball pitchers in the American League and the National League in 2005 and 2006.
c. inflation and inflationary expectations on unemployment rates in the United States, using quarterly data from 1960-2006.
d. drinking alcohol on the GPA of 150 students at your university, controlling for incoming SAT scores.

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ajeigbeibraheem ajeigbeibraheem · Answer 1 · 2021-04-04T22:29:19+02:00

Answer:

b

Step-by-step explanation:

The regression which comprises of both entity & time effect can be expressed as;

[tex]Y_{it} = B_1X_{it} + \alpha_i + \lambda_i + \mu_{it}[/tex]

Where;

take charge of the state-explicit qualities that don't change over the long run

controls the variables that differ after some time yet not across substances,

[tex]u_{it}[/tex] controls state-specific qualities which shift after some time.

Thus, from the options given above:

The first option lacks or does not involve the time effect as we are only looking for a particular year.

The second option comprises only 2 years of data which implies that we have a time effect involved. In addition to that, there exist a few variables in executing measurements that join fixed effects. In this case, we can utilize regression with time and fixed effect.

(c) The information here is quarterly over an extended period of time. Hence, it would prefer a period arrangement information than a fixed and time impact information. Thus, this is incorrect.

(d) Since no time variable is associated, we reject the option.