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STUDENT SOLUTIONS MANUAL
Jeffrey M. Wooldridge
Introductory Econometrics: A Modern Approach, 4e
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be
resold, copied, or distributed without the prior consent of the publisher.
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CONTENTS
Preface iv Chapter 1 Introduction 1 Chapter 2 The Simple Regression Model 3 Chapter 3 Multiple Regression Analysis: Estimation 9 Chapter 4 Multiple Regression Analysis: Inference 17 Chapter 5 Multiple Regression Analysis: OLS Asymptotics 24 Chapter 6 Multiple Regression Analysis: Further Issues 27 Chapter 7 Multiple Regression Analysis With Qualitative 34 Information: Binary (or Dummy) Variables Chapter 8 Heteroskedasticity 42 Chapter 9 More on Specification and Data Problems 47 Chapter 10 Basic Regression Analysis With Time Series Data 52 Chapter 11 Further Issues in Using OLS With Time Series Data 58 Chapter 12 Serial Correlation and Heteroskedasticity in 65 Time Series Regressions Chapter 13 Pooling Cross Sections Across Time. Simple 71 Panel Data Methods Chapter 14 Advanced Panel Data Methods 78 Chapter 15 Instrumental Variables Estimation and Two Stage 85 Least Squares Chapter 16 Simultaneous Equations Models 92 Chapter 17 Limited Dependent Variable Models and Sample 99 Selection Corrections Chapter 18 Advanced Time Series Topics 110
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be
resold, copied, or distributed without the prior consent of the publisher.
iii
Appendix A Basic Mathematical Tools 117 Appendix B Fundamentals of Probability 119 Appendix C Fundamentals of Mathematical Statistics 120 Appendix D Summary of Matrix Algebra 122 Appendix E The Linear Regression Model in Matrix Form 123
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be
resold, copied, or distributed without the prior consent of the publisher.
iv
PREFACE This manual contains solutions to the odd-numbered problems and computer exercises in Introductory Econometrics: A Modern Approach, 4e. Hopefully, you will find that the solutions are detailed enough to act as a study supplement to the text. Rather than just presenting the final answer, I usually provide detailed steps, emphasizing where the chapter material is used in solving the problems. Some of the answers given here are subjective, and you or your instructor may have perfectly acceptable alternative answers or opinions. I obtained the solutions to the computer exercises using Stata, starting with version 4.0 and ending with version 9.0. Nevertheless, almost all of the estimation methods covered in the text have been standardized, and different econometrics or statistical packages should give the same answers to the reported degree of accuracy. There can be differences when applying more advanced techniques, as conventions sometimes differ on how to choose or estimate auxiliary parameters. (Examples include heteroskedasticity-robust standard errors, estimates of a random effects model, and corrections for sample selection bias.) Any differences in estimates or test statistics should be practically unimportant, provided you are using a reasonably large sample size. While I have endeavored to make the solutions free of mistakes, some errors may have crept in. I would appreciate hearing from students who find mistakes. I will keep a list of any notable errors on the Web site for the book, www.international.cengage.com. I would also like to hear from students who have suggestions for improving either the solutions or the problems themselves. I can be reached via e-mail at [email protected]. I hope that you find this solutions manual helpful when used in conjunction with the text. I look forward to hearing from you. Jeffrey M. Wooldridge Department of Economics Michigan State University 110 Marshall-Adams Hall East Lansing, MI 48824-1038
