class2-06 - Econ 444, Monday September 25, class 2 Econ...

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Unformatted text preview: Econ 444, Monday September 25, class 2 Econ 444, Monday September 25, class 2 Robert de Jong 1 1 Department of Economics Ohio State University Robert de Jong Econ 444, Monday September 25, class 2 Econ 444, Monday September 25, class 2 First: 1 discussion of important dates 2 splitting class into two groups for computer exercise 3 exercise for today Main class topic today: how to draw the regression line Robert de Jong Econ 444, Monday September 25, class 2 Econ 444, Monday September 25, class 2 Regression line = straight line through the point cloud Simplified example: data on stock price Y i and trade volume X i : X i Y i 1 2 4 2 1 3 Q: How to draw the line through the point cloud? A: we use the least squares principle Robert de Jong Econ 444, Monday September 25, class 2 Econ 444, Monday September 25, class 2 (picture on blackboard; discussion) Line y = 2 point # vertical distance squared vertical to line distance 1 = | Y 1 2 | 2 = 2 = | Y 2 2 | 2 = 3 1 = | Y 3 2 | 1 2 = 1 total: 1 Robert de Jong Econ 444, Monday September 25, class 2 Econ 444, Monday September 25, class 2...
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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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class2-06 - Econ 444, Monday September 25, class 2 Econ...

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