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Notes - Week 1 - Econ 471 Today we will talk about the...

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Econ. 471 Today, we will talk about the simple regression model
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Types of Data – Cross Sectional Cross-sectional 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 sample-selection problem
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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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The Simple Regression Model y = β 0 + β 1 x + u In the simple linear regression model, where y = β 0 + β 1 x + u , we typically refer to y as the Dependent Variable, or Left-Hand Side Variable, or Explained Variable, or Regressand
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Some Terminology, cont In the simple linear regression of y on x, we typically refer to x as the Independent Variable, or Right-Hand Side Variable, or Explanatory Variable, or Regressor, or Covariate, or Control Variables
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We need some assumptions to identify β 0’ β 1
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