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Assume all variable have expected value 0. 1. Suppose the observable variables x , y , and z, are related by the linear model =

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Assume all variable have expected value 0. 1. Suppose the observable variables x , y , and z, are related by the linear model = Ax, + AZ + 6, COV ( x, # ) = COV ( Z,#) =0 Suppose that x =g(z ) for a known function g (.). Are the parameters , and A identified? Explain. 2. Consider the linear model cov ( X . 6 ) =0 Suppose that y is measured with error, i. e. the data under study consist of xy, such that cov ( x.") = Gov(2,17)=0 What is the relationship between / and the regression coefficient in the linear model V =XX +5 cov (x .5) =0 Does your answer imply that measurement error is irrelevant to the empirical analyst, in this case

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