econometrics (Page 343)

# econometrics (Page 343)

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and (5.3.8): In both cases the width of the confidence interval is proportional to the standard error of the estimator.That is, the larger the standard error, the larger is the width of the confidence interval. Put differently, the larger the standard error of the estimator, the greater is the uncertainty of estimating the true value of the unknown parameter. Thus, the standard error of an estimator is often described as a measure of the precisionof the estimator, i.e., how precisely the estimator measures the true population value. Returning to our illustrative consumption–income example, in Chapter 3 (Section 3.6) we found that ˆ β2=0.5091,se (ˆ β2)=0.0357, and df =8. If we

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