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Unformatted text preview: 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 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).
This result does not surprise us since under LR.1 through LR.6 the
OLS estimator has an exact normal distribution and the histogram is
an estimate of that distribution. 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.
ˆ
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
represent...
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This note was uploaded on 02/13/2014 for the course ECON 350 taught by Professor Donaldbrown during the Fall '10 term at Yale.
 Fall '10
 DonaldBrown
 Econometrics

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