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1 . In empirical research, there are two common modelling problems with regard to variable misspecification. First, researchers may add a variable that should not
1 . In empirical research, there are two common modelling problems with regard to variable misspecification. First, researchers may add a variable that should not be in the model. Second, the researchers may leave out an important variable that should be included in the model. The consequence for the first case is that the estimation is still unbias but inefficient, while the consequences for the latter case is the estimator is biased. b . Show that if you add an unnecessary variable in an econometrics model will lead to unbias but inefficient estimates? C. Show that if you unintentionally drop an important variable in an econometrics model will lead to a bias estimates
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