Why is it helpful to think about the moment conditions of a simple linear regression even if OLS yields the same estimates?
A) The moment conditions are easier to program in Excel.
B) The moment conditions will get the smaller standard errors.
C) The moment conditions establish causality whereas OLS just estimates correlation.
D) The moment conditions are used directly to produce the slope and intercept.

Question

Quizplus · Accepted Answer

The moment conditions are fundamental to the derivation of the Ordinary Least Squares (OLS) estimates for the slope and intercept in a simple linear regression. They are based on setting the first derivatives of the sum of squared residuals with respect to the parameters (slope and intercept) to zero, which directly leads to the formulas for estimating these parameters. This approach is foundational to understanding how OLS estimates are calculated.

Why Is It Helpful to Think About the Moment Conditions