OLS Assumptions, Violations, and Diagnostics
Consider the linear regression model $Y = X\beta + \epsilon$, estimated by ordinary least squares (OLS).
1. State the five classical OLS assumptions (Gauss-Markov plus normality).
2. For each assumption, explain what goes wrong when it is violated -- specifically, does it affect bias, efficiency, or the validity of standard errors and hypothesis tests?
3. For each violation, name a diagnostic test to detect it and a practical remedy.
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