- In the following model,

Y = β_{0} + β_{1} X_{1} + β_{2} X_{2} + β_{3} X_{3} + β_{4} X_{4} + u

suppose the error variance has the following structure:

E(u_{i}^{2}) = σ^{2} X_{3i}^{4reg }

How would you transform the model so as to achieve homoskedastic error variance? How would you estimate the transformed model? List the various steps.

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