2. (5 points) Consider the following model: savings, = Be + Brincome, + Byage + Bychildren: +€, where n=5000 Suppose you

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2 5 Points Consider The Following Model Savings Be Brincome Byage Bychildren Where N 5000 Suppose You 1 (18.51 KiB) Viewed 39 times

2. (5 points) Consider the following model: savings, = Be + Brincome, + Byage + Bychildren: +€, where n=5000 Suppose you suspect the following form of heteroskedasticity: Var(cilincome, age) = o(0.5incomex + 2age) (*) Does this form of heteroskedasticity makes sense? (1. does it have the desired proper ties?) (b) Suppose you want to obtain efficiency. How would you estimate this model? Write the estimable model explicitly and explain how you obtain each variable. (C) Now suppose that you only require the estimator to be unbiased. Propose two ways to estimate this model.