Pls what are the assumptions of OLS in Econometrics?

Question

Pls what are the assumptions of OLS in Econometrics?

Answer 1

The first, and the most important assumption (since it guarantees consistency) is zero correlation between the error term and exogenous regressors, i.e. your right-hand side variables.

The next is the zero mean assumption on the error term; actually, this assumption is automatically satisfied if you include a constant in you regression.  

Further, the variance of your error term must be constant regardless of the regressors, so that you do not encounter heteroskedasticity.

The error term is assumed to be distributed normally.

The error term are independent of each other between observation, so that you do not face autocorrelation.

I think this should do.

P.S. And of course you need to have a random sample :))

Answer 2

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