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3-30-09 - Economic Statistics Class Notes Inverse...

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Economic Statistics – Class Notes – 3/30/09 Inverse relationship between distance and exports, so the alternative hypothesis is H1: B < 0 For exam Proofs: Properties of regression line Sum of the errors = 0 Correlation coefficient * (Sy / Sx) proofs know these NEW NOTES : H. Dummy variable – A variable that captures the effects of a qualitative factor on a dependent variable Example: Changes in Qualitative characteristics of the economy in the following situations: War and Peace Recessions and booms o Through the use of dummy variables we can capture the effects of each time Republican government administration and Democrat government administration Northern and Southern states – air conditioning use? Urban vs. Rural areas – driving distances Male vs. Female – o All of these are qualitative characteristics – there are no numbers associated with these variables so we have to just attach a number to these variables. 1.
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3-30-09 - Economic Statistics Class Notes Inverse...

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