This is another example of perfect (multi)collinearity. Consequently, if the model to be estimated has an intercept term then, the independent variable X must take at least two different values. In some textbooks this condition is stated as a separate assumption of the classical linear regression model. However, as we have seen, this assumption is not needed if we assume that “there are no exact linear relationship between the independent variables (No perfect multicollinearity)”. Instructor: Dr. Ozan ERUYGUR e-mail: [email protected]Lecture Notes 17
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