(Wooldridge Problem 2.2) In lecture, we assumed without loss of generality that E[u] = 0 when establishing the zero cond

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(Wooldridge Problem 2.2) In lecture, we assumed without loss ofgenerality that E = 0when establishing the zero conditional mean assumption. Supposethat instead E = α0 6= 0 sothat this assumption of E = 0 is invalidated. Show that themodel y = β0 + β1x + u can berewritten with a new intercept parameter β∗0 and error term e suchthat E[e] = 0, however with theslope parameter unchanged

Wooldridge Problem 2 2 In Lecture We Assumed Without Loss Of Generality That E U 0 When Establishing The Zero Cond 1 (67.76 KiB) Viewed 28 times

Problem 5. (Wooldridge Problem 2.2) In lecture we assumed without loss of generality that E = 0 when establishing the zero conditional mean assumption. Suppose that instead E ao 0 so that this assumption of E 0 is invalidated. Show that the model y Bo + B₁x + u can be rewritten with a new intercept parameter ß* and error term e such that E[e] = 0, however with the slope parameter unchanged. = = =