TEST BANK FOR Econometric Analysis 5th Edition By William H. Greene

1. (a) Let . The normal equations are given by (3-12), , hence for each of the columns of X, x           = n x x X 1 . . 1 1 X′e = 0 = i i i k, we know that xk’e=0. This implies that Σ = 0and x e . i i e Σ 0 (b) Use Σ = 0 to conclude from the first normal equation that i i e a = y − bx . (c) Know that Σ = 0 and . It follows then that i i e Σ = 0 i i i x e Σ ( − ) = 0 i i i x x e . Further, the latter implies ( )( ) = 0 i Σ − bx i ...