Question: (a) Consider regression model Y, = B +U; Derive OLS estimator of B and show that Bis unbiased estimator of B, if assumptions of classical

(a) Consider regression model Y, = B +U; Derive
(a) Consider regression model Y, = B +U; Derive OLS estimator of B and show that Bis unbiased estimator of B, if assumptions of classical linear regression model hold. {5} (b)A researcher specified regression model Y = B1 + B2X2 + B3X3 + u in order to estimate impact of share of agriculture in economy and human capital on per capita GDP. Data for 15 countries is summarized below: EY = 135 EX2 = 105 EX3 = 180 [yx2 = -28 Eyx3 = 38 Exzx3 = -12 [yz = 40 Ex? = 60 Ex3 = 74 Where Y= Per Capita GDP in thousands dollars, X2 = Percentage of labor force in agriculture and X3 = Human capital (Average Years of Schooling of the population over 25 year of age) Fit OLS regression equation and interpret it 11 . Using fitted regression equation, predict per capita GDP if Percentage of labor force in economy is 9 and Average Years of Schooling of the population over 25 year of age is 8 iii. Calculate R and interpret it. (6+2+2 }

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