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Suppose that a variable Y depends on a variable Z but Z is measured with measurement error. That is, the true relationship is Y =
Suppose that a variable Y depends on a variable Z but Z is measured with measurement error. That is, the true relationship is Y" = 8, + 82 Z + v but Z is measured as X = Z + w where w is the measurement error. We run the regression Y = 8, + 8 X + u to obtain the OLS estimator 8, and B,. Which of the following statements is correct? If w is independent of both Z and v, then , is consistent for By. O If w and Z are correlated but it is independent of v. then B, is consistent for By. O Even if w is independent of both Z and v. 8, is inconsistent for Ba. O If w and u are correlated but w is independent of Z, then Bais consistent for Ba
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