Consider the following linear model $$y_t = x_t' \beta +u_t$$ where $t =1,...,T$ and $x_t = (x_{1t} x_{2t} ... x_{kt})'$ , $ \beta$ is $k \times 1$ vector of unknown coefficients, $y_t$ is an iid disturbance term with the variance $\sigma^2$ and $E(x_tu_t)=0$ for all t. Find the consistent but inefficient GMM estimator. --- My solution: I know that $E(x_tu_t)= \frac{1}{T} \sum^T_{t=1} [x_t(y_t-x_t'\beta)]=0$ Define the Jacobian matrix $$J(B)= g(B)' W g(B)$$ where $g(B)=\frac{1}{T} \sum^T_{t=1} [x_t(y_t-x_t'\beta)]$ and $W=I_k$ Here, I define W as an identity matrix, because efficiency depends on W matrix and when W=I, I guess that this estimator become inefficient . (Maybe wrong, I don't know exactly) Then, the Jacobean matrix $J(B)$ in the matrix form is written as $$J(B)=[\frac{1}{T} X'(y-X\beta]' I_k [\frac{1}{T} X'(y-X\beta]$$ Let's minimize J(B) w.r.t $\beta$ That's, $\partial J(B) / \partial \beta =0 $ Then, $$\hat{\beta} = (X'XX'X)^{-1} X'XX'y$$ This result seems odd to me. How do you solve for this question ? Where I'm wrong? Please share your ideas with me.