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Q1 In a workshop presentation, Prof. HBY shows that the residuals (Y X6) are uncorrelated with the predictors X. He then claims, since the residuals
Q1 In a workshop presentation, Prof. HBY shows that the residuals (Y X6) are uncorrelated with the predictors X. He then claims, \"since the residuals are uncorrelated with the predictors. this provides evidence that theres no omitted variables bias.\" Explain why HBY is wrong. [Hintz Here you need to understand how the OLS is estimated and the difference between the \"true" error in the \"true" model (unobservable) and the estimated residual in the \"assumed" model (from the observed data).]
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