Answer Happy

PLEASE ANSWER ASAP!! Suppose that a dependent variable Y
and three independent variables X1; X2; and X3 have linear
relationship as follows Yi = 0 + 1X1i + 2X2i + 3X3i + i; i =
1;2;:::;N: To estimate the true values 0; 1; 2; and 3 from data
f(Y1;X11;X21;X31) ;(Y2;X12;X22;X32) ;:::;(YN;X1N;X2N;X3N)g; N 4; we
should use the best estimate(s). Of course, there are an inÖnite
number of estimates ^Y = ^ 0 + ^ 1X1i + ^ 2X2i + ^ 3X3i of the
econometric model Yi = 0 + 1X1i + 2X2i + 3X3i + i since there is an
inÖnite number of possible values for quadruple ^ 0; ^ 1; ^ 2; ^ 3
. Describe the main idea (main steps) of the OLS (Ordinary Least
Squares Estimate) for getting the ìbestîestimates ^ 0; ^ 1; ^ 2; ^
3 of 0; 1; 2; 3: (Hint: You donít need to solve the detailed Örst
order conditions.
1. (25 Marks) Suppose that a dependent variable Y and three independent variables X1, X2, and X3 have linear relationship as follows Y; = Bo + 32 Xii + 32X2i + B3X3i + ti, i = 1, 2, ...,N. To estimate the true values Bo, B1, B2, and 3, from data {(Y1, X11, X21, X31), (Y2, X12, X22, X32),. 1,...,(YN, X1N, X2N, X3N)}, N > 4, we should use the best estimate(s). Of course, there are an infinite number of estimates û = B. + B,X1i + , Xzi + 33X3i + + of the econometric model Y; – Bo + BX1i + 32X2 + B3X3i + €; since there is an infinite number of possible valucs for quadruple (Bo, B1, B2, B3). Describe the main idea (main steps) of the OLS (Ordinary Least Squares Estimate) for getting the "best" estimates Bo, B1, B2, B3 of 30, 31, 32, 33. (Ilint: You don't need to solve the detailed first order conditions.)