When studying the classical linear regression model, one necessarily comes across the Gauss-Markov Theorem. The Gauss-Markov Theorem is a central theorem for linear regression models. It states different conditions that, when met, ensure that your estimator has the lowest variance among all unbiased estimators. More formally, Continue reading The Gauss Markov Theorem
Monthly Archives: February 2015
What is an indirect proof?
In economics, especially in theoretical economics, it is often necessary to formally prove your statements. Meaning to show your statements are correct in a logical way. One possible way of showing that your statements are correct is by providing an indirect proof. The following couple of lines try to explain the concept of indirect proof in a simple way.
Derivation of the Least Squares Estimator for Beta in Matrix Notation
The following post is going to derive the least squares estimator for , which we will denote as . In general start by mathematically formalizing relationships we think are present in the real world and write it down in a formula.
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