# Deriving OLS Estimates for a Simple Regression Model

# The Simple Regression:

In Econometrics, a simple regression is a tool used to establish a relationship between 2 variables. One of the variables (Y) is called the dependent variable or the *regressand*, while the other variable (X) is called the independent variable or the *regressor*. Mathematically, a simple regression model is expressed as:

Here α and β are the regression coefficients i.e. the parameters that need to be calculated to understand the relation between Y and X. i has been subscripted along…