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population. For each I compute the OLS estimates of ( βo , β1 ); then I
sort the estimates and graph them into 2 histograms. Melissa Tartari (Yale) Econometrics 23 / 27 Part I: Normal Disturbances II
Observe that the relationship between y and x is Ushaped while the
relationship between y and x 2 is linear: in the do …le we con…rm this
graphicaly. Melissa Tartari (Yale) Econometrics 24 / 27 Part I: Normal Disturbances II
Observe that the relationship between y and x is Ushaped while the
relationship between y and x 2 is linear: in the do …le we con…rm this
graphicaly.
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Observe that the histogram for β1 is centered about 1 (as it should by
unbiasedness) and has a bellshaped symmetrical form, also 95% of
the probability mass is within 2 standard deviations of the mean: all
of these are typical features of a normal distribution (the red line
represents the best …tting N and helps us make comparisons). Melissa Tartari (Yale) Econometrics 24 / 27 Part I: Normal Disturbances II
Observe that the relationship between y and x is Ushaped while the
relationship between y and x 2 is linear: in the...
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 Fall '10
 DonaldBrown
 Econometrics

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