Subject: Introductory Econometrics I have no idea how to solve this question and I need explanation for the answer.

Explain each step in deriving the proof;

=

Let

……………………………………………………..………………………..………… i

in equation (i), can as well be expressed as;

…………………………………………………………………………………….…………………… ii

And further simplifying;

………………………………………………………………………………………………. iii

Note that;

Substituting (iii) into (i)

………………………………………………………………….………………………… iv

in (iv) can as well be expressed as;

= ……………………………………………….………………………..…………………………… v

Substituting (iv) into (v) and further simplifying;

……………………………………….……………………………………………………… vi

……………………………………………………………………………………………….. vii

Multiplying both numerator and denominator by ;

……………………………………………………………………..………………………….. viii

Simplifying;

……………………………………………………………………………….. viii

……………………………………………………………………………….. ix