Framework and Assumptions Questions: Does Assumption 3.1 imply a causal relationship from Xt to Yi? Not necessarily.As Kendall and Stuart (1961,Vol.2,Ch.26,p.279)point out,"a statistical relationship,however strong and however suggestive, can never establish causal connection.Our ideas of causation must come from outside statistics ultimately,from some theory or other." Denote Y= (Yi,,Yn)', n×1, E= (e1,,en)/, n×1, X=(X1,,Xm), n×K. where the t-th row of X isX=(1,Xit,...,Xit). With these matrix notations,we have a compact expression for Assumption 3.1: Y= XB°+e, n×1=(n×K)(K×1)+n×1. ADVANCED ECONOMETRICS Classical Linear Regression Model May11,2021 5ADVANCED ECONOMETRICS Classical Linear Regression Model May 11, 2021 5 Framework and Assumptions  Questions: