Consider the following simple linear regression model: y = Bo + B₁x+u. Using a sample of n observations on x and y, you estimate the model by OLS and obtain the estimates Bo, B₁, and the R-squared of the regression, R². Then you scale this sample by a factor of 100, obtain a new sample {/100; y/100} for i = 1,..., n, re-estimate the model by OLS, and denote the new coefficient estimates by Bo, 31, and the new R-squared of the regression by R². a) Give the expression of 3, in terms of ŝ.. and justify your answer.
Consider the following simple linear regression model: y = Bo + B₁x+u. Using a sample of n observations on x and y, you estimate the model by OLS and obtain the estimates Bo, B₁, and the R-squared of the regression, R². Then you scale this sample by a factor of 100, obtain a new sample {/100; y/100} for i = 1,..., n, re-estimate the model by OLS, and denote the new coefficient estimates by Bo, 31, and the new R-squared of the regression by R². a) Give the expression of 3, in terms of ŝ.. and justify your answer.
Chapter3: Polynomial Functions
Section: Chapter Questions
Problem 18T
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Transcribed Image Text:Consider the following simple linear regression model:
y = Bo + B₁x + u.
Using a sample of n observations on x and y, you estimate the model by OLS and obtain
the estimates B₁, B₁, and the R-squared of the regression, R². Then you scale this sample
by a factor of 100, obtain a new sample {₁/100; y;/100} for i = 1,..., n, re-estimate the
model by OLS, and denote the new coefficient estimates by Bo, B₁, and the new R-squared
of the regression by R².
a) Give the expression of ₁ in terms of 3₁, and justify your answer.
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