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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.
- Generate 1000 random draws from (Y, X).
- Plot the observed values of Y against X.
- Overlay a plot of the (population) CEF of Y given X
- Overlay a plot of the (population) BLP of Y given X.
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Economics
Authors: Gregory Mankiw, Mark P. Taylor
5th Edition
1473768543, 978-1473768543
