Consider the standard simple regression model y = (0 + (1x + u under the Gauss Markov
Question:
(i) Find E() in terms of the xi, (0, and (1. Verify that is unbiased for when the population intercept ((0) in zero. Are there other cases where is unbiased?
(ii) Find the variance of . (The variance does not depend on (0.)
(iii) Show that Var() ( Var(). [For any sample of data, /( /with strict inequality unless = 0.]
(iv) Comment on the tradeoff between bias and variance when choosing between and .
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i From equation 266 Plugging in y i b 0 b 1 x i u i gives After standard algebra the numerator can b...View the full answer
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Related Book For
Introductory Econometrics A Modern Approach
ISBN: 978-0324660548
4th edition
Authors: Jeffrey M. Wooldridge
Question Posted:
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