Estimation with Key - ECO 6416 - Dr. Dickie - Exercise...

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ECO 6416 - Dr. Dickie - Exercise – Point & Interval Estimation, Hypothesis Testing First determine whether you need to construct an interval estimate or to conduct a hypothesis test. The formula for an interval estimator is: Point estimate (critical value) (s.e. of point estimate) ±× The point estimators we have considered are sample mean, sample proportion, and regression coefficient. The critical value is the critical value of the appropriate test statistic – a standard normal or a t for the interval estimators we have considered. Usually you would use the 5% critical value, to get a 95% confidence interval. But, sometimes you may need some other degree of confidence. The final term in the formula for the interval estimator is the standard error of the point estimate. If you need to conduct a hypothesis test, it is easy to do so using the confidence interval, if you are doing a two tail test. (Just check whether the hypothesized value lies within the ( (1 ) α % confidence interval to test at % significance. But, for a one tail test, using the confidence interval to do the test is confusing. Whether the test is one
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Estimation with Key - ECO 6416 - Dr. Dickie - Exercise...

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