1 Cross-sectional OLS Classical Assumptions Asymptotic Assumptions (Any Sample Size) (Large Sample) MLR.1 Linear in parameters The model in population can be written as y = β0 + β1 x1 + . . . + βk xk + u, where β0 , β1 , . . ., βk are the unknown parameters of interest and u is an unobservable random error. MLR.2 Random sampling We have a random sample of n observations, {(xi1 , xi2 , . . . , xik , yi ) : i = 1, 2, . . . , n} from the population model. MLR.3 Zero conditional mean MLR.3 Zero mean…
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