Economics Homework Solutions
Problem
#12209

A question about restricted residual sum of squares, F-Test and R squared.

Please could someone show me the steps involved that are required to answer the question attached.

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econm.doc
Suppose in the following model:

i = 1,2,….,n

I want to test whether both slope coefficients are zero. In order to
derive the restricted residual sum of squares, it is necessary to
estimate the following model:





?

Secondly, how do I derive the relationship between the F test which
tests the null

?

? How do I go about explaining if s (the standard errors of the
residuals) is better?
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