Monte Carlo simulation. Simulate the following model in STATA: Y = Bo + B1X +U where B= Bo Bi X NU (0, 1), that is, X is

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Monte Carlo Simulation Simulate The Following Model In Stata Y Bo B1x U Where B Bo Bi X Nu 0 1 That Is X Is 1 (38.6 KiB) Viewed 61 times

Monte Carlo simulation. Simulate the following model in STATA: Y = Bo + B1X +U where B= Bo Bi X NU (0, 1), that is, X is uniformly distributed between 0 and 1; and U + N (0, 75 x X^). 3-)-(3) For each simulation, generate a data set {yi, 1; i = 1, ..., n} with n= 70 observations. Then, for each sample, estimate B using OLS, make the tests described below, and save the p-values. Rum m = 1000 simulations. In each of the following questions, you will be testing two mull hypotheses (setting the significance level to 5%): Ho: B1 = 0 vs Hi: B170; and Ho: B1 = 3 vs H: B173. (a) (points: 6) Regress y on r without robust standard errors. In what fraction of the simulations can yon reject each of the two mill hypotheses? Most likely, you will find that the fraction of rejections is not very close to 5%. Why is that true for each test?