ECS3706
Assignment 2 Semester 2 2024
Detailed Solutions, References & Explanations
Unique number: 399706
Due Date: September 2024
QUESTION 1
Why econometricians must know and understand the classical linear regression
assumptions:
Econometricians must understand the classical linear regression assumptions because they form
the foundation of Ordinary Least Squares (OLS) estimation, ensuring the accuracy, validity, and
reliability of the regression results. These assumptions help in:
• Ensuring unbiased estimators: When assumptions like zero correlation between error terms
and explanatory variables hold, the OLS estimators are unbiased, meaning they provide the
correct values of the population parameters on average.
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