Simple linear regression model problem

Reference no: EM1396628

A fellow researcher fits a simple linear regression model Yi = α + βXi + ui by least squares, but has doubts that the first least squares assumption E(ui |Xi) = 0 is correct for her data set. She decides to test for this assumption by calculating the residuals from her regression ûi = Yi - Yi and then performing the usual t-test of the null hypothesis that their (population) mean is zero, assuming the errors are normally distributed. Evaluate her strategy.

Reference no: EM1396628

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