ECON2228 Study Guide - Heteroscedasticity, Econometrics, Farad
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: y= 0+ 1 x+ o o o o o y dependent, explained, response, or predicted variable. E [ x]=e [ ]=0: average value of unobservables is the same across all samples of the population by the value of x, the common average is equal to the average of over the entire population. Keely henesey: for any given value of x , the distribution of y is centered around e [ y x , this equation shows how the average value of y changes with x. The covariance between x and is zero, cov ( x, )=e (x )=0: extension of what we know . E[ x( y 0 1 x)]=0: choose estimates of 0 and 1 to solve sample counterparts of the extensions of what we know . 1 n ( yi 0 1 xi)=0: first order conditions for ols estimates, implication for 1 if x and y are positively correlated in the sample then 1.
