E2

With the additional assumption that p2 = p3 = 0, it can be shown that fa E yix2i + fa E yix3i) 2

Therefore, if the null hypothesis is true, both (8.5.4) and (8.5.5) give identical estimates of true a2. This statement should not be surprising because if there is a trivial relationship between Y and X2 and X3, the sole source of variation in Y is due to the random forces represented by ui. If, however, the null hypothesis is false, that is, X2 and X3 definitely influence Y, the equality between (8.5.4) and (8.5.5) will not hold. In this case, the ESS will be

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Rules Of The Rich And Wealthy

Rules Of The Rich And Wealthy

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