Monthly Archives: January 2016

CLRM – Assumption 3: Explanatory Variables must be exogenous

Assumption 3, exogeneity of explanatory variables requires that the explanatory variables in the model do not explain variation in the error terms, formally we express assumption 3 as Advertisements

Posted in Econometrics | 7 Comments

CLRM – Assumption 2: Full Rank of Matrix X

Assumption 2 requires the matrix of explanatory variables to have full rank. This means that in case matrix is a matrix the rank of matrix is . Namely,

Posted in Econometrics | 6 Comments