2.2.3.2.1 Gauss–Markov Condition 1: E(μ i ) = 0 for All Observations The first condition is that the expected value of the disturbance term in any observation should be 0. Sometimes it will be positive, sometimes negative, but it should not have a systematic tendency in either direction. If an intercept is included in the regression equation, it is usually reasonable to assume that this condition is satisfied automatically since the role of the intercept is to pickup any systematic but constant tendency in Y not accounted for by the explanatory variables included in the regression equation.
