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11_TwoVariables0830_handout

# 11_TwoVariables0830_handout - 1.1 Two-variable OLS...

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1.1 Two-variable OLS: distributions 73-261 Econometrics August 30 Wooldridge 2.5

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Announcements p. 2 © CMU / Y. Kryukov Quiz this Friday, covering the material from this & previous week HW#1 – will be complete by end of day Due next Wed., Sept. 8 You can do all of it after today Next Monday – Labor day No class next Monday, Sept. 6 73 - 261 Aug - 31 1.1 Two - variable OLS
Review & plan p. 3 © CMU / Y. Kryukov Up to now: True coefficients ( β 0 , β 1 ) are constants Our estimates are random variables Today Distribution of the estimates So we can tell how precise our estimates are And do statistical tests 1 0 ˆ , ˆ β β

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Approach p. 4 © CMU / Y. Kryukov Want distribution of ’s ’s are functions of X i ’s and Y i ’s Y i ’s are function of X i ’s and u i ’s We observe X i ’s So we condition on them I.e. we hold X i ’s fixed Some books just have X i as part of population What could ’s be given X i ? Only independent random variable is u i Which affects ’s via Y i ’s How do ’s depend on Y i ’s and u i ‘s? β ˆ β ˆ β ˆ β ˆ β ˆ