3.9. Consider the following formulations of the two-variable PRF:
Model I: Yi = β1 + β2 Xi + ui
Model II: Yi = α1 + α2 ( Xi − X¯ ) + ui
a. Find the estimators of β1 and α1 . Are they identical? Are their variances identical?
b. Find the estimators of β2 and α2 . Are they identical? Are their variances identical?
c. What is the advantage, if any, of model II over model I?
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