Assignment 1 - ECONOMETRICS 30C00200 Fall 2013 EXERCISES 1 DATE 12.09.2013 NAME STUDENT NUMBER Pham Quoc Bao 362683 Mark here the problems you have done

Assignment 1 - ECONOMETRICS 30C00200 Fall 2013 EXERCISES 1...

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ECONOMETRICS 30C00200 Fall 2013 EXERCISES 1 DATE 12.09.2013 NAME STUDENT NUMBER Pham Quoc Bao 362683 Mark here the problems you have done 1 2 3 4 5
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Question 1: a) Error term is the variation between the observed value and the true unobservable value, that reflect the randomness of data (difference between y i and true y) Residuals, which is an observable estimate of the error term, shows the difference between the observed value and the estimated value observable from the sample (difference between y i and y^ i ) b) The true underlying model is usually unknown/unobservable c) We need to control relevant factors in our estimation for the ceteris paribus to hold (only the independent variable(s) under consideration has effect on the dependent variable (other factors are held constant). d) We can use OLS method on log(y i )=α+βx i 2 +u i e) Estimator is the method that helps yield the estimate of some value (estimate is the result of the estimator) Question 2: a/ Let {(xi;yi), i=1,...,n} denotes a random sample of size n from the population. The regression
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