13.7 Suppose you have panel data from an experiment with T = 2 periods (so t = 1, 2). Consider the panel data regression model with fixed individual and time effects and individual characteristics Wi that do not change over time. Let the treatment be binary, so that Xit = 1 for t = 2 for the individuals in the treatment group and Xit = 0 otherwise. Consider the population regression model Yit = ai + b1Xit + b21Dt * Wi2 + b0Dt + vit, where ai are individual fixed effects, Dt is the binary variable that equals 1 if t = 2 and equals 0 if t = 1, Dt * Wi is the product of Dt and Wi, and the a’s and b’s are unknown coefficients. Let Yi = Yi2 - Yi1. Derive Equation

(13.6) (in the case of a single W regressor, so r = 1) from this population regression model.