The OLS estimators of the coefficients in multiple regression will have omitted variable bias A)only if an omitted determinant of Y_i is a continuous variable. B)if an omitted variable is correlated with at least one of the regressors, even though it is not a determinant of the dependent variable. C)only if the omitted variable is not normally distributed. D)if an omitted determinant of Y_i is correlated with at least one of the regressors.

Question

Quizplus · Accepted Answer

Omitted variable bias occurs when a determinant of the dependent variable (Y) is not included in the regression model. This determinant must also be correlated with at least one of the independent variables (Xs) in the model. Therefore, choice D correctly states that the OLS estimators will have omitted variable bias if an omitted determinant of Y is correlated with at least one of the regressors. Choices A, B, and C are incorrect and do not accurately describe the conditions necessary for omitted variable bias to occur.

The OLS Estimators of the Coefficients in Multiple Regression Will