In: Economics
Answer the following:
1) What is the true relationship between X and Y and what random or non-random assumptions do we make about this relationship in order for OLS to be a good estimation method?
2) What 4 assumptions do we need on the error term to make OLS a good estimation method and allow us to do normal hypothesis tests?
3) Briefly describe why OLS is BLUE (proofs not needed).
4) Explain when a null hypothesis is accepted.