A Weaker Assumption For unbiasedness. we assumed a zero conditional mean -E(ux x, ., xk=0 e For consistency, we can have the weaker assumption of zero mean and zero correlation -(u=0 and Cov(x ) =0, for 2...k o Without this assumption, Ols will be biased and inconsistent Economics 20- Prof anderson 6Economics 20 - Prof. Anderson 6 A Weaker Assumption For unbiasedness, we assumed a zero conditional mean – E(u|x1 , x2 ,…,xk ) = 0 For consistency, we can have the weaker assumption of zero mean and zero correlation – E(u) = 0 and Cov(xj ,u) = 0, for j = 1, 2, …, k Without this assumption, OLS will be biased and inconsistent!