The research shows that both X₁ and X2 are theoretically valid, meaning that they both belong in the true regression relationship. Yi = Bo + BiXi + B2X2i+ €i The researcher decides to estimate two regressions for the sample: Y = Bo + BıX + Gi Y₁ = Bo + B₂X2i + €₁

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3.
The research shows that both X₁ and X₂ are theoretically valid, meaning that they
both belong in the true regression relationship.
Yi Bo + B₁X1i + B₂X₂i + Ei
The researcher decides to estimate two regressions for the sample:
Y₁ = Bo + B₁X₁i + Ei
Y₁ = Bo + B₂X2i + €₁
Would the estimated regression coefficients for ₁ and ₂ be the same as if the researchers
had estimated the true regression relationship? How will the error term compare between
models? How will the R-squared values for these two regressions compare to the R-squared
of the true relationship? Explain and support your answers with relevant formulas.
Transcribed Image Text:3. The research shows that both X₁ and X₂ are theoretically valid, meaning that they both belong in the true regression relationship. Yi Bo + B₁X1i + B₂X₂i + Ei The researcher decides to estimate two regressions for the sample: Y₁ = Bo + B₁X₁i + Ei Y₁ = Bo + B₂X2i + €₁ Would the estimated regression coefficients for ₁ and ₂ be the same as if the researchers had estimated the true regression relationship? How will the error term compare between models? How will the R-squared values for these two regressions compare to the R-squared of the true relationship? Explain and support your answers with relevant formulas.
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