Suppose that x1 in2 what is the asymptotic distribution of

Question

Question: 1. Given data on y and x explain what functional form you will use and how you will estimate the parameters if

(a) y is a proportion and lies between 0 and 1.

(b) x > 0 and x assumes very large values relative to y.

(c) You are interested in estimating a constant elasticity of demand function.

2. (Stochastic regressors) In the linear regression model

y₁ = α + βx₁ + u₁

Suppose that x1, IN(λ2). What is the (asymptotic) distribution of the least squares estimator ? Just state the result. Proof not required.