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The parameters and are the OLS intercept and slope coefficients from a regression of C on M and the sample average of the stochastic error
The parameters and are the OLS intercept and slope coefficients from a regression of C on M and the sample average of the stochastic error term. a. Show that 2 can be written as 82 = 0+=1 fii, where f = m/TSS and m = M - M and TSSM = total sum of squares of Mi. b. Using part (a) and fi = 0, show that and are uncorrelated. [5 Marks] [6 Marks] c. Derive an expression that shows can be written as = 0 + ( 0). - [3 Marks]
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