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STUDENT SOLUTIONS MANUAL
Jeffrey M. Wooldridge
Introductory Econometrics: A Modern Approach, 4e
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
Information: Binary (or Dummy) Variables
34
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
Time Series Regressions
65
Chapter 13
Pooling Cross Sections Across Time. Simple
Panel Data Methods
71
Chapter 14
Advanced Panel Data Methods
78
Chapter 15
Instrumental Variables Estimation and Two Stage
Least Squares
85
Chapter 16
Simultaneous Equations Models
92
Chapter 17
Limited Dependent Variable Models and Sample
Selection Corrections
99
Chapter 18
Advanced Time Series Topics
ii
110
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
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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,
academic.cengage.com/economics/wooldridge. 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
iv