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In: Economics

Suppose that the true model is y = β0 +β1x+u. You decided to run the model...

Suppose that the true model is y = β0 +β1x+u. You decided to run the model without the intercept term.

1. Under what circumstance(s) would the coefficient term in your model (without the intercept term) be an unbiased estimator.

2. Your boss likes your model choice because the conditional variance of your estimator is the most efficient (between the two model choices). Evaluate your boss’s statement.

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Expert Solution

Rahul Sunny answered 4 months ago
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