If variance of an independent variable in a regression model, say x₁, is greater than 0, or Var(x₁) 0, the inconsistency in ₁ (estimator associated with x₁) is negative, if x₁ and the error term are positively related.

Question

If variance of an independent variable in a regression model, say x₁, is greater than 0, or Var(x₁) > 0, the inconsistency in ₁ (estimator associated with x₁) is negative, if x₁ and the error term are positively related.

Quizplus · Accepted Answer

The inconsistency in the estimator associated with x₁ is positive when Var(x₁)>0 and x₁ and the error term are positively related.

If Variance of an Independent Variable in a Regression Model