Economics · Econometrics

For a linear regression model Y = α + βX + u, the statement that Ordinary Least Squares (OLS) estimators are BLUE implies that:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1the variance of the OLS estimator will be minimum even if it is biased
2the OLS estimators will be unbiased but their variance will not be minimum
3the OLS estimators will be unbiased and have minimum variance among the class of all linear unbiased estimators✓
4the OLS estimators will not be efficient

Correct answer

the OLS estimators will be unbiased and have minimum variance among the class of all linear unbiased estimators

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For a linear regression model Y = &alpha; + &beta;X + u, the statement that Ordinary Least Squares (OLS) estimators are BLUE implies that: