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Econometrics

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Moderate

LPM Drawbacks

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Which of the following are potential drawbacks of the Linear Probability Model (LPM)? Select ALL that apply.

A

It suffers from heteroskedasticity.

B

It requires that the error term is normally distributed.

C

It can yield fitted values that are greater than one.

D

It can yield negative fitted values.

E

It cannot be used to estimate probabilities.