In the discussion of Harveys model in Section 11.7, it is noted that the initial estimator of
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In the discussion of Harvey’s model in Section 11.7, it is noted that the initial estimator of γ1, the constant term in the regression of ln e2i on a constant, and zi is inconsistent by the amount 1.2704. Harvey points out that if the purpose of this initial regression is only to obtain starting values for the iterations, then the correction is not necessary. Explain why this statement would be true.
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