Suppose you specify the following linear regression model relating exchange rate in year t (x,) and growth rate in exports in year t (y) for a small country in Asia. у, 3 Во + В,х, + €, where ɛ is the error term a. Assuming that this simple linear regression model fulfills all the classical assumptions we discussed in class, please show that the OLS estimator for the intercept of the simple linear regression model is an unbiased estimator. [Hint: Use the same technique we used

Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter1: Functions
Section1.EA: Extended Application Using Extrapolation To Predict Life Expectancy
Problem 5EA
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b. Do you think it was reasonable to assume that the first six of the classical assumptions
are fulfilled for the simple linear regression model stated above? Which one of the
classical assumptions do you think is most likely to be violated in this model? Please
Transcribed Image Text:b. Do you think it was reasonable to assume that the first six of the classical assumptions are fulfilled for the simple linear regression model stated above? Which one of the classical assumptions do you think is most likely to be violated in this model? Please
4. Suppose you specify the following linear regression model relating exchange rate in
year t (x,) and growth rate in exports in year t (y) for a small country in Asia.
y, = B, + B,x, + ɛ,
where & is the error term
a. Assuming that this simple linear regression model fulfills all the classical assumptions
we discussed in class, please show that the OLS estimator for the intercept of the simple
linear regression model is an unbiased estimator. [Hint: Use the same technique we used
3
in class to demonstrate the unbiasedness of the OLS estimator of the slope.]
Transcribed Image Text:4. Suppose you specify the following linear regression model relating exchange rate in year t (x,) and growth rate in exports in year t (y) for a small country in Asia. y, = B, + B,x, + ɛ, where & is the error term a. Assuming that this simple linear regression model fulfills all the classical assumptions we discussed in class, please show that the OLS estimator for the intercept of the simple linear regression model is an unbiased estimator. [Hint: Use the same technique we used 3 in class to demonstrate the unbiasedness of the OLS estimator of the slope.]
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