Suppose that (Y) and (X) are related by the regression (Y=1.0+2.0 X+u). A researcher has observations on

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Suppose that \(Y\) and \(X\) are related by the regression \(Y=1.0+2.0 X+u\). A researcher has observations on \(Y\) and \(X\), where \(0 \leq X \leq 20\), where the conditional variance is \(\operatorname{var}\left(u_{i} \mid X_{i}=x\right)=1\) for \(0 \leq x \leq 10\) and \(\operatorname{var}\left(u_{i} \mid X_{i}=x\right)=16\) for \(1010\) ? Why?

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Introduction To Econometrics

ISBN: 9780134461991

4th Edition

Authors: James Stock, Mark Watson

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