. Consider the simple linear regression model. y = Bo + B1x + u Please show that

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1. Consider the simple linear regression model.
y = Bo + B1x + u
Please show that
Corr(z, u) ou
Corr(z, x) 0r
plimß1.iv = B1+
where ơu
and o, are the standard deviations of u and x, respectively.
Hint: we have learned that Buy = Cov(z,Y). Please use
Cou (2,π)
Cov(z,y)
Cov(z, x)
Cov(z, y)
Cov(z, x)'
plimß1,1v = plim
and Corr(x,y) = Cov(x, y)/(ơx0y).
Transcribed Image Text:1. Consider the simple linear regression model. y = Bo + B1x + u Please show that Corr(z, u) ou Corr(z, x) 0r plimß1.iv = B1+ where ơu and o, are the standard deviations of u and x, respectively. Hint: we have learned that Buy = Cov(z,Y). Please use Cou (2,π) Cov(z,y) Cov(z, x) Cov(z, y) Cov(z, x)' plimß1,1v = plim and Corr(x,y) = Cov(x, y)/(ơx0y).
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