Consider the model Y i 1 2 X i u i In practice we measure X i by X i such that a X i X i 5 b X i 3X i c X i (X i i ), where i is a purely random term with the usual properties What will be the effect of these measurement errors on estimates of true 1 and 2 ...

Consider the model Y i = 1 + 2 X i + u i

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Consider the model

Y_i = β₁ + β₂X^∗_i + u_i

In practice we measure X^∗_i by X_i such that

a. X_i = X^∗_i + 5

b. X_i = 3X^∗_i

c. X_i = (X^∗_i + ε_i ), where ε_i is a purely random term with the usual properties.

What will be the effect of these measurement errors on estimates of true β₁ and β₂?

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Basic Econometrics

ISBN: 978-0073375779

5th edition

Authors: Damodar N. Gujrati, Dawn C. Porter

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Question Posted: May 28, 2018 07:09 AM

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Consider the model Y i = 1 + 2 X i + u i

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a b c The intercept coeff...View the full answer

Basic Econometrics

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