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Lecture 11 2010

Lecture 11 2010 - 1 I Introduction II Statistical and...

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Unformatted text preview: 1 I. Introduction II. Statistical and Notational Preliminaries III. Simple Regression ( Chapter 5 ) A. Introduction: Economic theory; from correlation to causation; evaluation. B. Population Regression Equation. C. Sample Regression Equation. D. Estimation – OLS. E. Classical Regression Model. Price = $ - 0.0785 Miles + $23,143 R² = 0.1331 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 10000 20000 30000 40000 50000 60000 70000 Price ($) Mileage Relationship of Price to Mileage for a Sample of Used 2004 Honda Accords. D. Ordinary Least Squares – OLS . 1. Estimation – method or rules for estimating . There are 3 population parameters to estimate: 2 D. Ordinary Least Squares – OLS . 2. Fitting a line – fit a line through sample data. 3. Errors s Errors: We can’t draw a single straight line through all observations. s Objective - fit the line so that errors are balanced above and below the line....
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Lecture 11 2010 - 1 I Introduction II Statistical and...

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