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Population Regression Model Assignment | Homework For You

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December 10th, 2019

Consider the following population regression model relating the dependent variable y* and the regressor X*, 

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Homework For You

However, during the data collection, the regressor is measured with error, i.e., the observed regressor is 

X=X* +V 

a) Suppose Cov(, V,) 0, please show why OLS estimator will be biased. 

b) If there exists an exogenous variable Z which is a valid instrument for X, please state two 

assumptions that Z should satisfy. Get Economics homework help today

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