In the Case of Perfect Multicollinearity, OLS Is Unable to Estimate

question 6

Essay

In the case of perfect multicollinearity, OLS is unable to estimate the slope coefficients of the variables involved. Assume that you have included both $X _ { 1 } \text { and } X _ { 2 }$ as explanatory variables, and that $X _ { 2 } = X _ { 1 } ^ { 2 }$ , so that there is an exact relationship between two explanatory variables. Does this pose a problem for estimation?

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