Practice Final Exam: Sample Problems

I anticipate that the actual final exam will include six problems, each worth 10 points. They will be approximately of the same style and level of difficulty, as the problems below.

Problem 1

You were hired to answer the following question: “What is the effect of stay-at-home orders
on COVID-19 infections in the United States?” You cannot run an experiment but assume
that you have access to any observational (i.e. non-experimental) data you might want to
answer this question. Describe the ideal dataset and the econometric tools that you want to
use to complete this assignment. Specifically:

1. Define the unit of observation (i.e. if your ideal data are cross-sectional, define i; if your ideal data are a time series, define t, if your ideal data are panel, define both i and t.)

2. Define the outcome variable yit. (This notation implies that your ideal data are panel, but that does not need to be the case).

3. Define the key regressor of interest xit.

4. Define control variables wit.

5. Describe possible unobservable factors that will be picked up by uit.

6. Define the main estimated equation/model.

7. Identify the main coefficient of interest.

8. Which method will you use to estimate the main coefficient of interest?

9. How will you test whether this coefficient is statistically significant?

10. Identify and briefly discuss the main threat to the internal validity of your study.

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