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Consider the Following Population Regression Model Relating the Dependent Variable YiY _ { i }

Question 11

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Consider the following population regression model relating the dependent variable YiY _ { i } and regressor XiX _ { i } ,
Yi=β0+β1Xi+ui,i=1,,n.XiYi+Zi\begin{array} { c } Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { i } + u _ { i } , i = 1 , \ldots , n . \\X _ { i } \equiv Y _ { i } + Z _ { i }\end{array} where Z is a valid instrument for X.
(a)  Exlain why you should not use OLS to estimate β1\text { Exlain why you should not use OLS to estimate } \beta _ { 1 } \text {. }

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Since Z is a valid i...

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