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1. a) Suppose that the true linear regression model in a given situation is Y = B1+ B2X2i + Ui i = 1, 2,...,n
1. a) Suppose that the true linear regression model in a given situation is Y = B1+ B2X2i + Ui i = 1, 2,...,n and further that this model meets all the assumptions of Model A. Now, assume that the researcher mistakenly believes that the true model is Y = + Ui i = 1, 2,...,n and that she estimates this model using OLS. Prove that her estimator of will, in general, be biased. b) Suppose that the true linear regression model in a given situation is Y = + Ui i = 1, 2,...,n and further that this model meets all the assumptions of Model A. Now, assume that the researcher mistakenly believes that the true model is Y = B1+ B2X2i + Ui i = 1, 2,...,n and that she estimates this model using OLS. Prove that her estimators of and 2 will both be unbiased.
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a The estimator of 11will be biased b The estimators of 11and 22will be unbia...Get Instant Access to Expert-Tailored Solutions
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