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Need help with a and b


In class we saw how the objective of OLS is to choose coefficients Bo and B, that minimize the squared residuals, summed over all the sample data points, ie. . Since Y Bo+BX,te, we can re-arrange the objective function to: 3 Differentiating equation (1) with respect to Bo and B, leads to the two normal equations: 2(Y-3-3x)-1) 0 i-1 We have two equations, (2) and (3), and two unknowns, Bo and B. Please solve for the two OLS estimates Bo and B, following the steps below. a) [5] Solve equation (2) for ao depending on ai. Your result for ßo should look like in the lecture notes. b) 51 Simplify equation (3). Then plug in your result for Bo into equation (3). Solve for 81 and simplify again. Hint: Your result should look like this: e) [10] Make the result for the coefficient ßi look like the one in the lecture notes, ie the covariance of X and Y divided by the variance of X. Hint: Manipulate the numerator and the denominator separately
un D81 00 tHe two normal equations Ti TI Σ2(X-A-AK)(-X) = 0 We have two equations,(2 and (3), and two unknowns, B and . Please solve for the two a) 15) Solve equation (2) for Bo depending on B. Your result for 2n should look like in im1 OLS estimates βο and β1 following the steps below. the lecture notes. b) |5) Simplify equation (3). Then plug in your result for Bo into equation (3). Solve for 8, and simplify again. Hint: Your result should look like this:
0 0
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