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In: Statistics and Probability

3. Consider the simple linear regression Yi = 2Xi + ui for i = 1, 2,...

3. Consider the simple linear regression Yi = 2Xi + ui for i = 1, 2, . . . ,n. The ui are IID (0; 2 ).

a. Derive OLS estimator of 2 and called it b 2

b. Find its variance

c. Is b 2 unbiased, show it?

d.What is the risk we run when we do not include an intercept in the regression?

Do question d.

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Expert Solution

orchestra answered 1 year ago
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