class7-06 - Econ 444, Wednesday October 18, class 7 Econ...

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Unformatted text preview: Econ 444, Wednesday October 18, class 7 Econ 444, Wednesday October 18, class 7 Robert de Jong 1 1 Department of Economics Ohio State University Robert de Jong Econ 444, Wednesday October 18, class 7 Econ 444, Wednesday October 18, class 7 Wednesday October 18 Summary of Mondays class: R 2 Todays class material Midterm Summary of Mondays class: R 2 , the coefficient of determination A measure between 0 and 1 of how well the data fit the model Robert de Jong Econ 444, Wednesday October 18, class 7 Econ 444, Wednesday October 18, class 7 R 2 : 0: poor fit; 1: perfect fit R 2 is the fraction of the variation in Y i that is explained by the model Definition: R 2 = 1- RSS TSS = 1- e 2 i ( Y i- Y ) 2 Extreme values for R 2 : 1 R 2 = 1 : e 2 i = all residuals are zero all points are on the regression line 2 R 2 = : e 2 i = ( Y i- Y ) 2 = Y and 1 = regression line is horizontal Robert de Jong Econ 444, Wednesday October 18, class 7 Econ 444, Wednesday October 18, class 7 Exercise for today Faculty salaries as a function of productivity (1973 article) S i = 11 , 155 + 230...
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class7-06 - Econ 444, Wednesday October 18, class 7 Econ...

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