Solved

(Requires Appendix Material) Your Textbook Shows That OLS Is a Linear

Question 12

Essay

(Requires Appendix material) Your textbook shows that OLS is a linear estimator
β^1=i=1na^iYi, where a^i=XiXˉi=1n(XiXˉ)2\hat { \beta } _ { 1 } = \sum _ { i = 1 } ^ { n } \hat { a } _ { i } Y _ { i } , \text { where } \hat { a } _ { i } = \frac { X _ { i } - \bar { X } } { \sum _ { i = 1 } ^ { n } \left( X _ { i } - \bar { X } \right) ^ { 2 } } .
For OLS to be conditionally unbiased, the following two conditions must hold:
i=1na^i=0 and i=1na^iXi=1\sum _ { i = 1 } ^ { n } \hat { a } _ { i } = 0 \text { and } \sum _ { i = 1 } ^ { n } \hat { a } _ { i } X _ { i } = 1
Show that this is the case.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions