econometrics (Page 351)

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hypothesis, because the standard deviation does not have a specific value. Substituting the data of our example into (5.4.3), the reader should verify that the 95% confidence interval for σ 2 is as follows: 19.2347≤σ 2 ≤154.7336 (5.4.4) The interpretation of this interval is:If we establish 95% confidence limits on σ 2 and if we maintain a priori that these limits will include true σ 2 , we shall be right in the long run 95 percent of the time. 5.5 HYPOTHESIS TESTING: GENERAL COMMENTS Having discussed the problem of point and interval estimation, we shall now consider the topic of hypothesis testing. In this section we discuss briefly some general aspects of this topic;Appendix Agives some additional details.
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