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 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

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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.
 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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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.
 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 wooldri1@.msu.edu.

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

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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.