Question: In matrix notation it can be shown (see Appendix C) that = (X'X) 1 X'y a. What happens to when there is perfect

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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