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Question - Consider the following regression model for i = 1, ..., N: Yi = β1*X1i + β2*X2i + ui

Note that there is no intercept in this model (so it is assumed that β0 = 0).

a) Write down the least squares function minimized by OLS for this regression.

b) Compute the derivatives of the the least squares function with respect to b1, b2.

c) Suppose summation n i=1 X1i*X2i = 0. Show that β1 = [summation n i=1 X1i*Yi]/[summation n i=1 (X1i)^2].

Econometrics, Economics

  • Category:- Econometrics
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