In matrix notation it can be shown (see Appendix C) that (X 'X) 1 X 'y a What happens to when there is perfect collinearity among the Xs b How would you know if perfect collinearity exists ...

a If there is perfect multicollinearity XX become ...

In matrix notation it can be shown (see Appendix C) that = (X'X) 1 X'y a.

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In matrix notation it can be shown (see Appendix C) that

β̂ = (X'X)⁻¹X'y

a. What happens to β̂ when there is perfect collinearity among the X’s?

b. How would you know if perfect collinearity exists?

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Basic Econometrics

ISBN: 978-0073375779

5th edition

Authors: Damodar N. Gujrati, Dawn C. Porter

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Question Posted: Apr 30, 2018 06:51 AM

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In matrix notation it can be shown (see Appendix C) that = (X'X) 1 X'y a.

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Basic Econometrics

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