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Econ. 471
Today, we will talk about the
simple regression model
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View Full Document Types of Data – Cross Sectional
•
Crosssectional data is a random sample
•
Each observation is a new individual, firm, etc.
with information at a point in time
•
If the data is not a random sample, we have a
sampleselection problem
Types of Data – Time Series
•
Time series data has a separate observation for
each time period – e.g. stock prices
•
Since not a random sample, different problems
to consider
•
We’ll consider time series data later in this
course.
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View Full Document The Simple Regression Model
•
y
=
β
0
+
1
x
+
u
•
In the simple linear regression model,
where
y
=
0
+
1
x
+
u
,
we typically refer
to y as the
–
Dependent Variable, or
–
LeftHand Side Variable, or
–
Explained Variable, or
–
Regressand
Some Terminology, cont
•
In the simple linear regression of y on x,
we typically refer to x as the
–
Independent Variable, or
–
RightHand Side Variable, or
–
Explanatory Variable, or
–
Regressor, or
–
Covariate, or
–
Control Variables
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View Full Document We need some assumptions to
identify
β
0’
1
•
The average value of
u
, the error term, in
the population is 0.
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This note was uploaded on 10/15/2008 for the course ECON 471 taught by Professor Oliveiralima during the Spring '08 term at University of Illinois at Urbana–Champaign.
 Spring '08
 OLIVEIRALIMA
 Econometrics

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