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ch02OLSFIRST

# ch02OLSFIRST - ECON 6002 Econometrics Memorial University...

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ECON 6002 Econometrics Memorial University of Newfoundland Adapted from Vera Tabakova’s notes

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An Economic Model An Econometric Model Estimating the Regression Parameters Assessing the Least Squares Estimators The Gauss-Markov Theorem The Probability Distributions of the Least Squares Estimators Estimating the Variance of the Error Term FIRST
First: An Economic Model An Econometric Model FIRST

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Figure 2.1a Probability distribution of food expenditure y given income x = \$1000 Slide 2- Slide 2-4
Figure 2.1b Probability distributions of food expenditures y given incomes x = \$1000 and x = \$2000 Slide 2- 2-5

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The simple regression function E y x x y x ( | ) | = = + μ β β 1 2
Figure 2.2 The economic model: a linear relationship between average per person food expenditure and income Slide 2-7

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Slope of regression line “Δ” denotes “change in” β 2 = = E y x x dE y x dx ( | ) ( | )
Figure 2.3 The probability density function for y at two levels of income Slide 2-9 Principles of Econometrics, 3rd Edition

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Slide 2-10 Principles of Econometrics, 3rd Edition ( 29 1 2 | E y x x = β +β
Slide 2-11 Principles of Econometrics, 3rd Edition ( 29 2 var | y x = σ

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Slide 2-12 Principles of Econometrics, 3rd Edition ( 29 cov , 0 i j y y =
Slide 2-13 Principles of Econometrics, 3rd Edition

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Slide 2-14 Principles of Econometrics, 3rd Edition y ~ Nx x 1 n n 2 X , n 2 n
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