Condition Numbers

In Secs. 8.7 and 9.5 we examined the effect that small changes in y had on b = (X′X)⁻¹X′y when y = Xβ. Denoting these small changes by ε ₁, ε ₂, …, ε _n and supposing that they satisfied E ( ε ) = 0 and E ( ε ε ′ ) = σ 2 I n https://s3-euw1-ap-pe-df-pch-content-public-p.s3.eu-west-1.amazonaws.com/9780203748923/a6b92606-1b5b-4bf2-bc51-ca8dfd20fd64/content/eq686.tif"/>