Econometric Modeling: Achieving BLUE Status through Housing Case Studies

Our forthcoming book, "Econometric Modeling: Achieving BLUE Status through Housing Case Studies," provides the essential, step-by-step methodology required for students, quantitative analysts, and economists to construct, validate, and defend statistical models that adhere to the highest standards of econometric theory—specifically, the Best Linear Unbiased Estimator (BLUE).

This book is dedicated to bridging the gap between OLS theory and practical, high-stakes empirical analysis. Comprising eleven comprehensive chapters, the book progresses through the following core stages:

Part I: Establishing the Foundation (BLUE Methodology)

We begin by establishing the mathematical and operational defense of Ordinary Least Squares (OLS) regression as the optimal tool for linear estimation. This section introduces a systematic framework for rigorous data preparation, including the Two-Pass Methodology for outlier removal and error distribution normalization, and a critical approach to variable selection that structurally safeguards the model against pervasive issues like Omitted Variable Bias (OVB) and Multicollinearity.

Part II: Advanced Coding and Coefficient Generation

The core of the methodology is demonstrated through the systematic application of advanced categorical coding techniques—including Dummy, Effect, One-Hot, and Ordinal Coding. We show how these techniques are meticulously applied to generate clear, statistically significant, and explicit dollar coefficients for both continuous and discrete attributes, while maintaining the model's linearity and maximizing explanatory power.

Part III: Validation, Application, and Compliance

The final chapters transition from estimation to proof. We provide rigorous diagnostics to confirm adherence to the core OLS assumptions (Homoscedasticity and Normality) and establish external validity by demonstrating that the sales sample is a precise microcosm of the larger population. The book concludes by demonstrating the model's application—from top-down (population-level) performance metrics to the creation of bottom-up, objective valuation grids—ensuring that the final derived coefficients are fully validated and compliant with the BLUE requirements.

This text is a crucial resource for any analyst or technician seeking to move beyond simple regression and master the creation of statistically defensible, unbiased econometric models.