{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

class11-06

# class11-06 - Econ 444 Wednesday November 1 class 10 Econ...

This preview shows pages 1–6. Sign up to view the full content.

Econ 444, Wednesday November 1, class 10 Econ 444, class 11 Robert de Jong 1 1 Department of Economics Ohio State University Monday November 6 Robert de Jong Econ 444, class 11

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Econ 444, Wednesday November 1, class 10 Monday November 6 1 Exercise for today 2 New material: 1 dummy variables 2 multicollinearity Robert de Jong Econ 444, class 11
Econ 444, Wednesday November 1, class 10 Exercise for today: Hypothesis testing Note: “reject H 0 " means: we have statistical evidence against the hypothesis 1 Three possibilities: 1 Coefficient 0.01386 is approximately 3 standard errors away from 0 Reject H 0 2 t -value = 3.067 > 1.96 Reject H 0 3 p -value not present: it would have been smaller than 0.05 2 Same principle; only use 2.576 instead of 1.96 1 Coefficient 0.01386 is approximately 3 standard errors away from 0 Reject H 0 2 t -value = 3.067 > 2.576 Reject H 0 3 p -value not present: it would have been smaller than 0.01 Robert de Jong Econ 444, class 11

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Econ 444, Wednesday November 1, class 10 3 Question is: is 0.01386 less than 1.96 standard errors away from 0.3? Answer: NO; so, reject H 0 4 Tests the hypothesis H 0 : β 0 = 0. That is, it tests whether if return on equity equals zero, the log of CEO salary equals 0. This means salary equals 1; this makes no sense. 5 Less than 1%. 6 t-value = coefficient standard error , so standard error = coefficient t-value = 6 . 712168 77 . 468 = 0 . 0866 . Robert de Jong Econ 444, class 11
Econ 444, Wednesday November 1, class 10 Why does the 1.96 standard error rule work? P

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 16

class11-06 - Econ 444 Wednesday November 1 class 10 Econ...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online