While estimating a regression model you found that the explanatory variable is measured with certain error. Specify the model. What are its consequences on the parameters?
Introduction In regression analysis, we assume that the explanatory variables are measured accurately. However, in many real-life applications, the independent variables may suffer from measurement errors due to instrument limitations, reporting mistakes, or data entry errors. This issue leads to what is known as the problem of errors-in-variables, which can severely affect the estimation of […]