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Math Help - The correlation between the estimated errors and the X variable is always equal to 0?

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    The correlation between the estimated errors and the X variable is always equal to 0?


    consider to model:Yi=βo+β1Xi+εi
    Given some observed data y1, x1, y2, x2,..., y n, xn


    Show that the estimated sample covariance Cov(εi,Xi) MUST equal 0 in an OLS regression, where εi=Yi+β0-β1Xi is the estimated residual from the model. In other words, show that the sample correlation between the estimated errors and the X variable is always equal to 0 in OLS regression.

    thx for help!
    Last edited by lukhofai; August 8th 2010 at 07:03 AM.
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