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It is not hard,but tedious,to derive the OLS formulae for the slope coefficient in the multiple regression case with two explanatory variables.The formula for the first regression slope is (small letters refer to deviations from means as in
).
Show that this formula reduces to the slope coefficient for the linear regression model with one regressor if the sample correlation between the two explanatory variables is zero.Given this result,what can you say about the effect of omitting the second explanatory variable from the regression?
Subsidies
Financial support provided by a government to reduce the costs of producing goods or services, intended to encourage production or consumption.
Agricultural Subsidies
Financial support provided by the government to farmers to help stabilize food prices, ensure a steady supply of agricultural products, or directly increase farmers' incomes.
Misallocation Of Resources
The inefficient distribution or use of resources in an economy, leading to outcomes where goods or services are not produced at their highest valued use.
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