2. (i) Let Y be the ratio of net FDI as a proportion of GDP for 70 different developed and developing countries in the world for year 2017. The model to be estimated is the following: Y1 = B1 + B2X2 + ByXsi + B4X41 + up Where X2 log of per capita GDP: X, is the log of square of per capita GDP and X, is the proportion of population in the 20-60 years who have completed graduation. (i) State all the assumptions of the classical linear regression model to estimate the above model and indicate which assumption is violated in the above model when the regressors X2 , Xa and X, are defined in the above manner. (6 marks) (ii) Suppose you estimate the model: Y, = $1 + B2X2 + 1 However, the true model should also have the explanatory variable X, as given below: Y = a, + azx2 + ajka+ u Derive the omitted variable bias in f2 compared to a, and show that By = &2 if X2 and X, are not correlated. (6 marks)