Recall our regular simple regression (SR) model is y t = 1 + 2 x
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Question:
Recall our “regular” simple regression (SR) model is yt = β1 + β2xt + et. But what if we knew that β1 = 0 (i.e. that there is no intercept in our model)
(a) algebraically, what would our SR model look like in that case? (3 marks) What about graphically? (2 marks)
(b) using calculus and starting with the sum-of-squares function, derive the LS estimator b2 given that you know β1 = 0, similar to what we did in Lecture 3 when we derived our “regular” least-squares estimators. (10 marks)
Related Book For
Statistics for Business and Economics
ISBN: 978-0321826237
12th edition
Authors: James T. McClave, P. George Benson, Terry T Sincich
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