Econ103_Lec1

Perfect modelr2 1 where 0 r2 1 example r2 080

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Unformatted text preview: (xt (n x)(yt 1)sx sy y) , 1r1 r =0 4 Regression 4 of 9 •  Coefficient of DeterminaTon (R2 or r2): FracTon of the data’s variaTon accounted for by the model. Perfect modelR2 = 1 where 0 R2 1 •  Example: R2 =0.80 Data [y] = Model[ŷt] + Residuals[et] 100% = 80% + 20% •  Residuals: If the linear model is a good model for the data, there should be no structure in the plot of the residuals vs. x (or vs. ŷ). It should look like random points. 5...
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