Question

In: Economics

Answer the following: 1) What is the true relationship between X and Y and what random...

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.

Solutions

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