econometrics (Page 335)

# econometrics (Page 335)

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2 Also known as the probability of committing a Type I error.A Type I error consists in rejecting a true hypothesis, whereas a Type II error consists in accepting a false hypothesis. (This topic is discussed more fully in App. A.) The symbol αis also known as the size of the (statistical) test. 5.2 INTERVAL ESTIMATION: SOME BASIC IDEAS To fix the ideas, consider the hypothetical consumption-income example of Chapter 3. Equation (3.6.2) shows that the estimated marginal propensity to consume (MPC) β2 is 0.5091, which is a single (point) estimate of the unknown population MPC β2. How reliable is this estimate? As noted in Chapter 3, because of sampling fluctuations, a single estimate is likely to differ from the true value, although in repeated sampling its mean value is expected to be equal to the true value. [Note:E(

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