1. Which of the following are advantages of the use of panel data over pure cross-sectional or pure time-series modelling?

(i) The use of panel data can increase the number of degrees of freedom and therefore the power of tests

(ii) The use of panel data allows the average value of the dependent variable to vary either cross-sectionally or over time or both

(iii) The use of panel data enables the researcher allows the estimated relationship between the independent and dependent variables to vary either cross-sectionally or over time or both
2. Suppose that the value of $R^2$ for an estimated regression model is exactly zero. Which of the following are true?

i) All coefficient estimates on the slopes will be zero

ii) The fitted line will be horizontal with respect to all of the explanatory variables

iii) The regression line has not explained any of the variability of y about its mean value

iv) The intercept coefficient estimate must be zero.
3. Including relevant lagged values of the dependent variable on the right hand side of a regression equation could lead to which one of the following?
4. The fixed effects panel model is also sometimes known as
5. Which of the following are advantages of the VAR approach to modelling the relationship between variables relative to the estimation of full structural models?

i) VARs receive strong motivation from financial and economic theory


ii) VARs in their reduced forms can be used easily to produce time-series forecasts


iii) VAR models are typically highly parsimonious


iv) OLS can be applied separately to each equation in a reduced form VAR
