Let X i denote a binary variable and consider the regression Y i = 0 + 1 X i + u i. Let 11eb817c_7783_b4ae_84e6_a5d59207c1d7_SM2685_11 denote the sample mean for observations with X = 0 and 11eb817c_7783_dbbf_84e6_7b2f59b4b921_SM2685_11 denote the sample mean for observations with X= 1. Show that 11eb817c_7783_dbc0_84e6_7fc6ba489168_SM2685_00

Introduction to Econometrics 3rd Edition by James Stock, Mark Watson

Edition 3ISBN: 978-9352863501

Edition 3ISBN: 978-9352863501

Exercise 11

Let X i denote a binary variable and consider the regression Y i = 0 + 1 X i + u i. Let

denote the sample mean for observations with X = 0 and

denote the sample mean for observations with X= 1. Show that

Explanation

Verified

Given the regression model:
Here,
is...