ECO 3151 Study Guide - Midterm Guide: Collinearity, Observational Error, Sampling Distribution

• School: University of Ottawa
• Department: Economics
• Course: ECO 3151
• Professor: Mohammad Rafiquzzaman

Document Summary

_______________________________________________________________________: classical linear model (clm) assumptions for cross-section regression. The model in the population can be written as. Fall 2014 where are the unknown parameters of interest and is an unobservable random error or disturbance term. We have a random sample of n observations, In the sample (and therefore in the population), none of the independent variables is constant, and there is no exact linear relationships among the independent variables. The error has an expected value zero given any values of the explanatory variables. The error has the same variance given any values of the explanatory variables. The population error is independent of explanatory variables and is normally distributed with zero mean and variance. The role of assumption 3 (no perfect collinearity) is: if we have sample variation in each independent variable and no exact linear relationships among independent variables, we can compute.