Framework and Assumptions Assumption 3.2 [Strict Exogeneity]: E(et X)=E(et X1;...Xi;...,Xn)=0, t=1,,n. Assumption 3.2 may be called strict exogeneity in mean.It suggests that the mean values of et does not depend on the values of regressors {X1. Assumption 3.2 implies correct model specification for E(YXt). If t is an time index,then Assumption 3.2 indicates that the mean value of et does not depend on the past,current and future values of the regressors. If t is an index for cross-sectional units,then Assumption 3.2 indicates that the mean value of et does not depend on the values of the regressors of any cross-sectional units including itself. The strict exogeneity condition implies that for each observation,the value Xt is determined by the factors outside the regression model under study. ADVANCED ECONOMETRICS Classical Linear Regression Model May11,2021 6ADVANCED ECONOMETRICS Classical Linear Regression Model May 11, 2021 6 Framework and Assumptions Assumption 3.2