E4 E4 E x2ix3i2

7A.3 DERIVATION OF EQUATION (7.4.19)

Recall that m = Yi — ft — ¡32 X2i — fa X3i which can also be written as ui = yi — fa X2i — fa X3i where small letters, as usual, indicate deviations from mean values. Now

= E uiy where use is made of the fact that E uix2i = E uix3i = 0. (Why?) Also that is,

E uiyi = E y^ = E yi (^ — X2i — ¡33 X3i) E"2 = £ yi2 — & £ yix2i— & E yix3i which is the required result.

246 PART ONE: SINGLE-EQUATION REGRESSION MODELS

Was this article helpful?

0 0
Budgeting Basics

Budgeting Basics

Get All The Support And Guidance You Need To Be A Success At Budgeting. This Book Is One Of The Most Valuable Resources In The World When It Comes To Get Your Finances In Order Once And For All.

Get My Free Ebook


Post a comment