class6-06

# class6-06 - Econ 444, Wednesday October 16, class 6 Econ...

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Econ 444, Wednesday October 16, class 6 Econ 444, Monday October 16, class 6 Robert de Jong 1 1 Department of Economics Ohio State University Robert de Jong Econ 444, Monday October 16, class 6

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Econ 444, Wednesday October 16, class 6 Class program October 17 Hand in takehome # 2 Review of Wednesday’s class New material: R -squared Robert de Jong Econ 444, Monday October 16, class 6
Econ 444, Wednesday October 16, class 6 Review of Wednesday’s class: 1 True parameters and data-generating process 2 Multiple regression and coefficient interpretation 3 Statistical proof Robert de Jong Econ 444, Monday October 16, class 6

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Econ 444, Wednesday October 16, class 6 1. True parameters and data-generating process Econometricians mindsets We have observed data : the Y i and X i . We can calculate the regression line: calculate ˆ β 0 and ˆ β 1 . The data are generated as follows: 1 Start with X i 2 We move to the value suggested by the true regression line : β 0 + β 1 X i (Note: no “hats" on the betas here! 3 a random error ε i is added: Y i = β 0 + β 1 X i + ε i Robert de Jong Econ 444, Monday October 16, class 6
Econ 444, Wednesday October 16, class 6 Situation: 1 We have true but unknown coefficients β 0 and β 1 2 We try to approximate these coefficients using ˆ β 0 and ˆ β 1 Example: Y i : GPA in college X i : GPA in high school Question: what happens if X i has no impact on Y i ? (this is a statistical hypothesis ) Robert de Jong Econ 444, Monday October 16, class 6

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## This note was uploaded on 04/13/2009 for the course ECON 444 taught by Professor Ogaki during the Fall '07 term at Ohio State.

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class6-06 - Econ 444, Wednesday October 16, class 6 Econ...

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