slide8 - ECON321 : Econometrics Lecture 8 : Simple Linear...

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ECON321 : Econometrics Lecture 8 : Simple Linear Regression Sasan Bakhtiari University of Maryland, College Park Summer 2007 Session II,
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Linear Model I So far the mean of sample was treated as a constant so that x i = μ x + ± i . where ± i is the uncertain part. I Sometime mean changes with some parameter: I Rent = Flat Rent+Price of Utility+some uncertainty I Wage = Fixed wage + Tenure raises+some uncertainty I The uncertainties generally summarize all the other factors we don’t know about or don’t care about.
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Simple Linear Regression y i = β 0 + β 1 x i + ± i . I y i is the dependent or response variable. I x i is the independent or predictor variable. I ± i is the random error component. It is generally assumed to have zero mean. I β 0 is the intercept. I β 1 is the slope.
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Simple Linear Regression - 6 ? ± i ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± x y β 0 β 1
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Computing Unknown Parameters I n samles x i and y i are available and β 0 and β 1 need to be determined. I
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slide8 - ECON321 : Econometrics Lecture 8 : Simple Linear...

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