07slides.pdf

07slides.pdf - OLS Efficiency Using Qualitative Data Tyler...

• Notes
• 22

This preview shows 1 out of 9 pages.

OLSEfficiency&UsingQualitativeData TylerRansom UnivofOklahoma Febfive.osf,two.osfzero.osfone.osfnine.osf one.osf/two.osftwo.osf

Subscribe to view the full document.

Today’splan one.osf. Reviewreadingtopics one.osf.one.osf EfficiencyofOLSEstimators - TheGauss-MarkovTheorem one.osf.two.osf HowtoUseQualitativeData - DummyVariables - The“DummyVariableTrap” - LinearProbabilityModels two.osf. In-classactivity:Practicewithdummyvariables two.osf/two.osftwo.osf
EfficiencyofOLSEstimators three.osf/two.osftwo.osf

Subscribe to view the full document.

TheGauss-MarkovTheorem - UndertheGauss-MarkovAssumptions: - OLSestimator ˆ β zero.osf , . . . ˆ β k isthe bestlinearunbiasedestimator(BLUE) - WhatisBLUE?Workingbackwards: E: estimator—aruletocomputeanestimatefromasampleofdata U: unbiased— E ( ˆ β j )= β j , j = zero.osf , one.osf , . . . , k L: linear—theestimatorisalinearfunctionof y B: best—hasthe lowestsamplingvariance four.osf/two.osftwo.osf
Efficiency - Ontheseconddayofclasswetalkedaboutefficiency: - Anestimatoris efficient ifithasalowersamplingvariancethanallother estimators - Thus, Var ( ˆ β j ) < Var ( ˜ β j ) forall j ,where ˜ β j isanalternativeestimator - Thisiswhatwemeanby“best” - What’ssogreataboutOLSbeingefficient? - Usuallyefficientestimatorsarenotassimpletocomputeas ˆ β j ! five.osf/two.osftwo.osf

Subscribe to view the full document.

HowtoUseQualitativeData six.osf/two.osftwo.osf
DescribingQualitativeInformation - Untilnow,allexampleshaveusedcontinuousvariables,numericalvalues - Howtowedescribebinaryqualitativeinformation?(e.g.Yes/No) - Aworkerbelongstoaunionordoesnot - Afirmoffersafour.osfzero.osfone.osf(k)pensionplanoritdoesnot - Canbecapturedbydefininga binaryvariable (or dummyvariable ) - Mustdecidewhichoutcomeisassignedzero.osf,andwhichisone.osf - Choosevariablenametobedescriptive seven.osf/two.osftwo.osf

Subscribe to view the full document.

Example - toindicategender, female ,whichisone.osfifthepersonisfemale,zero.osfifmale - Thisisabetternamethan gender or sex (whatdoes gender = one.osfmean?) -------------------------------------------------------- colgpa sat hsperc athlete female sex -------------------------------------------------------- three.tosf eight.tosfone.tosfzero.tosf six.tosfsix.tosf.six.tosfsix.tosfsix.tosfsix.tosfseven.tosf
You've reached the end of this preview.
• Fall '08
• STAFF
• Regression Analysis, OLS estimators, Gauss–Markov theorem, Linear Probability Models

{[ snackBarMessage ]}

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern