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Derive the 90% confidence interval of 31+B, in the model log Y = Bo+B log X+B2 log X2+u under the assumptions of CNLR. You may
Derive the 90% confidence interval of 31+B, in the model log Y = Bo+B log X+B2 log X2+u under the assumptions of CNLR. You may think of this model as a Cobb-Douglas production function where Y, X1, X2 are output, labor and capital, respectively, and the slopes are the elasticities of output with respect to labor and capital while their sum are the returns to scale. Discuss whether Mean Independence is a good assumption in this model. Discuss the other assumptions as well assuming you observe a sample of the largest companies in different sectors. Derive the 90% confidence interval of 31+B, in the model log Y = Bo+B log X+B2 log X2+u under the assumptions of CNLR. You may think of this model as a Cobb-Douglas production function where Y, X1, X2 are output, labor and capital, respectively, and the slopes are the elasticities of output with respect to labor and capital while their sum are the returns to scale. Discuss whether Mean Independence is a good assumption in this model. Discuss the other assumptions as well assuming you observe a sample of the largest companies in different sectors
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