Research Paper Writing- Econometrics

  1. True or False. Explain your answer in detail.
    1. In a population regression model, Y = β0+β1X+u, β0 and β1 are unknown. Because of this uncertainty, Var(β0) and Var(β1) are not equal to zero.
      1. R2 measures the ratio of variation that can be explained by the regression model to variation that can’t be explained by the regression model.
      1. E(u|X) = 0 only implies E(u) = 0. It doesn’t say anything about the relationship between u and X.
      1. In order for our regression estimators to be unbiased, we need the variance of X to be as small as possible. In the best scenario, we want the variance of X to be 0.
      1. The homoskedasticity assumption states that variances of error terms given different value of X are the same.

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