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Melissa tartari yale econometrics 24 27 part i normal

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Unformatted text preview: om the 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 U-shaped 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 U-shaped while the relationship between y and x 2 is linear: in the do …le we con…rm this graphicaly. ˆ Observe that the histogram for β1 is centered about 1 (as it should by unbiasedness) and has a bell-shaped 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 U-shaped while the relationship between y and x 2 is linear: in the...
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