Ordinary Least Squares - Population model

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Reference no: EM133086178

Question: Consider the population model

Y = Xβ + u

where Y and u are it n x 1 vectors, X is an n x k matrix containing observations of k variables and β is a k x 1 vector of unknown parameters.

Discuss whether it is accurate to say that if we estimate by Ordinary Least Squares we will identify values which we know to be close to the true values

In your answer you should be sure to make clear any assumptions you make and explain as fully as possible any statements you make.

What changes about your answer to (a) if you are told that there is a variable which should have been included in the population model which has been omitted from X?

Reference no: EM133086178

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