The paper uses $\I$ to denote the identity matrix, while you seem to use this symbol to denote a matrix where all its elements are equal to one, which the paper expresses using the notation $\1\1'$, $\1$ denoting a column vector of ones. (Moreover the paper defines $\X$ as a matrix where the series of a regressor is in one row, not in one column as is the most traditional case, but you do not seem