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Problem 1. Consider the regression model with a single regressor: Y₁ = Bo + B₁X₁ + ui. Suppose the Least Squares Assumptions #1-#3 are satisfied. (i) Show that X, is a valid instrument, i.e., show that instrument Z₁ = X₁ nous. (ii) Show that the TSLS estimator constructed using Z₁ = = B₁. relevant and exoge- X, is identical to the OLS estimator of

Problem 1. Consider the regression model with a single regressor: Y₁ = Bo + B₁X₁ + ui. Suppose the Least Squares Assumptions #1-#3 are satisfied. (i) Show that X, is a valid instrument, i.e., show that instrument Z₁ = X₁ nous. (ii) Show that the TSLS estimator constructed using Z₁ = = B₁. relevant and exoge- X, is identical to the OLS estimator of

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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I just need help with part 2. 

Problem 1. Consider the regression model with a single regressor: Y₁ = Bo + B₁Xi+ui. Suppose the Least Squares Assumptions #1-#3 are satisfied. (i) Show that X; is a valid instrument, i.e., show that instrument Z; = nous. X, is relevant and exoge- (ii) Show that the TSLS estimator constructed using Z₁ = X, is identical to the OLS estimator of B₁.
Transcribed Image Text:Problem 1. Consider the regression model with a single regressor: Y₁ = Bo + B₁Xi+ui. Suppose the Least Squares Assumptions #1-#3 are satisfied. (i) Show that X; is a valid instrument, i.e., show that instrument Z; = nous. X, is relevant and exoge- (ii) Show that the TSLS estimator constructed using Z₁ = X, is identical to the OLS estimator of B₁.
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