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The OLS Slope Estimator Is Not Defined If There Is

question 52

Essay

The OLS slope estimator is not defined if there is no variation in the data for the explanatory variable. You are interested in estimating a regression relating earnings to years of schooling. Imagine that you had collected data on earnings for different individuals, but that all these individuals had completed a college education (16 years of education). Sketch what the data would look like and explain intuitively why the OLS coefficient does not exist in this situation.


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Audit Statement

A formal opinion or report issued by an auditor based on an evaluation of a company's financial statements, assessing their accuracy and compliance with applicable standards and regulations.

Six Sigma

A set of techniques and tools for process improvement, aiming at reducing the probability of error or defect in any corporate or business process.

Variation Management

A managerial process aimed at minimizing or controlling the variance in processes, products, or services to enhance quality and efficiency.

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