# OHCh1 - PART 1 THE BASIC REGRESSION MODEL Chapter 1 An...

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PART 1: THE BASIC REGRESSION MODEL Chapter 1: An Overview of Regression Analysis

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1 What is Econometrics? The application of mathematical statistics to economic data 1.1 Uses of Econometrics Econometrics has three major uses: describing economic reality testing hypothesis about economic theory
forecasting future economic activity 2 A Review of Statistics This section is from Sections 1-3 of Chapter 16 of Studenmund. 2.1 Experiment A random experiment is a process leading to at least two possible outcomes with uncertainty as to which will occur.

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Examples Tossing a coin, throwing a pair of dice, and drawing a card from a pack of cards are all experiments. 2.2 Population The set of all possible outcomes of an experiment is called the population . Example Consider the experiment of tossing two coins. Then we have these outcomes: HH;HT;TH;TT .
2.3 Random Variables A random variable X is a numerical description of the outcome(s) of an experiment. A discrete random variable is one whose values can be listed, or, equiva- lently, there are "gaps" in the values it can assume.

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OHCh1 - PART 1 THE BASIC REGRESSION MODEL Chapter 1 An...

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