Q1 In the original equation, x? is an omitted variable to be replaced by its proxy X3. Original equation: y = Bo + 1x1 + $2x2 + B3x3 + u Proxy equation: x3 = 6 + 63x3 + V3 a) Substitute the proxy equation in the original equation to obtain a regression of y on x1, x2, and x3. Show what the coefficients will be on x1, x2, and x3. b) If you estimate the equation in part (a) by replacing the variable x? by its proxy x3, will the coefficient on x, be biased? Explain