From a previous posts on the Gauss Markov Theorem and OLS we know that the assumption of unbiasedness must full fill the following condition Continue reading Proof Gauss Markov Theorem

# 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 Continue reading CLRM – Assumption 3: Explanatory Variables must be exogenous

# 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,

# How to Enable Gui Root Login in Debian 8

In this post I am going to explain how to enable GUI root access on Debian 8. Instructions for Debian 9 a similar and can be found here. At this point I should warn you that using the root account is dangerous as you can ruin your whole system. Try to follow this guide exactly.

# CLRM – Assumption 1: Linear Parameter and correct model specification

Assumption 1 requires that the dependent variable is a linear combination of the explanatory variables and the error terms . Assumption 1 requires the specified model to be linear in parameters, but it does not require the model to be linear in variables. Equation 1 and 2 depict a model which is both, linear in parameter and variables. Note that Equation 1 and 2 show the same model in different notation.

Continue reading CLRM – Assumption 1: Linear Parameter and correct model specification

# Capital Adjustment Costs

Understanding investment activity in an economy is not trivial. The erratic nature of firm level investment activity is somewhat of a mystery to me and it took me quite some time to get a vague idea of what could be the generating process behind such an erratic behavior. I think understanding capital adjustment costs was the key to understand why it can be rational for firms to invest in a spasmodic way. In this post I would like to shortly summarize part of what I learnt so far and list different types of capital adjustment costs found in the literature.

# Unbiased Estimator of Sample Variance – Vol. 2

Lately I received some criticism saying that my proof (link to proof) on the unbiasedness of the estimator for the sample variance strikes through its unnecessary length. Well, as I am an economist and love proofs which read like a book, I never really saw the benefit of bowling down a proof to a couple of lines. Actually, I hate it if I have to brew over a proof for an hour before I clearly understand what’s going on. However, in order to satisfy the need for mathematical beauty, I looked around and found the following proof which is way shorter than my original version.

Continue reading Unbiased Estimator of Sample Variance – Vol. 2