5 - Chapter 2 Exercise Solutions Principles of Econometrics...

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Chapter 2, Exercise Solutions, Principles of Econometrics, 3e 5 EXERCISE 2.3 (a) The observations on y and x and the estimated least-squares line are graphed in part (b). The line drawn for part (a) will depend on each student’s subjective choice about the position of the line. For this reason, it has been omitted. (b) Preliminary calculations yield: () 2 21 44 22 17.5 7.3333 3.5 ii i i i x y xxyy xx yx == = = ∑∑∑ The least squares estimates are 2 2 22 1.257 17.5 b −− = 12 7.3333 1.2571 3.5 2.9333 byb x =− = × = 3 4 5 6 7 8 9
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