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Suppose that X = Uniform (0, 1), U = Normal (0, 10), and Y = 5 + 2X + 5X2 + U. Assume that X
Suppose that X = Uniform (0, 1), U = Normal (0, 10), and
Y = 5 + 2X + 5X2 + U. Assume that X and U are independent.
(1) Generate 1000 random draws from (Y, X).
(2) Plot the observed values of Y against X.
(3) Overlay a plot of the (population) CEF of Y given X
(4) Overlay a plot of the (population) BLP of Y given X.
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