Question: This question concerns the error-variables model discussed in the lecture notes on identification. Recall that . The observed data consist of two variables X] and

 This question concerns the error-variables model discussed in the lecture notes

This question concerns the error-variables model discussed in the lecture notes on identification. Recall that . The observed data consist of two variables X] and X2. . Let X" and X" denote the measurement errors. . The two-variate model we have is X1 = X; + X" and X2 = X3 + X, (2) where the object of interest is the true slope in the regression of X{ on X2, which we denote by B . Assume that (i) coup( X,, X?) = 0, (ii) coup(X;, X2) > 0, and (iii) coup(X,, X"; ) = 0i, j = 1, 2. Derive the identified set for B

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