Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 12

In the model, show that OLS consistently estimates a and ? if a. is uncorrelated with x. and b. is uncorrelated with x. and x2 , which are weaker assumptions than (9.19). [Hint: Write the equation as in and recall from Chapter 5 that sufficient for consistency of OLS for the intercept and slope is E(ui) = 0 and Cov(xi, ui) = 0.]

Step 1 of 2

Given the equation

a is intercept and

b is slope

This model is also called random slope model

Also we are given that