If, in addition to the least squares assumptions made in the previous chapter on the simple regression model, the errors are homoskedastic, then the OLS estimator is
A)identical to the TSLS estimator.
B)BLUE.
C)inconsistent.
D)different from the OLS estimator in the presence of heteroskedasticity.

Question

Quizplus · Accepted Answer

If the errors are homoskedastic, then the OLS estimator is BLUE (Best Linear Unbiased Estimator). Homoskedasticity means that the variance of the errors is constant across all values of the independent variable. This assumption is important for OLS because it allows the estimator to be both unbiased and have the minimum variance among all linear unbiased estimators. Therefore, option B is the correct answer.

If, in Addition to the Least Squares Assumptions Made in the Previous