Question
The sample regression model is used to make inferences about an unobserved population with the following regression function (estimated through OLS): Yi = b0 +
The sample regression model is used to make inferences about an unobserved population with the following regression function (estimated through OLS): Yi = b0 + b1 Xi + ei where i = 1, 2, ..., n
a. Explain what each variable in the equation represents. What is the population parameter(s) that we want to make statistical inferences about?
b. What assumptions about the population regression function are required to ensure that the sample statistic is best unbiased linear estimator (BLUE)? Explain what each assumption means and how to detect for violations.
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