Homework Solution
1.a. A priori expectations regarding the anticipated signs of the regression coefficients;
X2 > 0; X3 > 0.
GDP a function of capital and labour.
b. Estimated equation: Y = -9101.01 + 46.5379X2 + 0.0423X3.
c. X2: if all other variables ar
Functional forms part 2
ECN2014: Data analysis for
Economists
Linearity principle
For a regression model linear in
explanatory variables the rate of change
[i.e. the slope] of the dependent variables
remains constant for a unit change in the
explanatory v
Dynamic economic models
ECN2014 Data Analysis for
Economists
Dynamic models
The dependence of a variable Y (the
dependent variable) on another variable X
(the explanatory variable) is rarely
instantaneous! Far more realistic is that Y
responds to X with a
Functional forms of regression
models
ECN2014: Data analysis for
Economists
Functional forms
The following models are linear in
parameters but are not necessarily linear
in variables:
Log-linear or constant elasticity models
Semi-log models
Reciprocal mod
Properties of OLS estimators
ECN2014 Data Analysis for
Economists
Lecture overview
Identification of the key features of the
most relevant PDFs:
Normal distribution;
Chi-square distribution;
T distribution; and
F distribution.
Properties of point es
Hypothesis testing under
multiple regression
Dr A. Vindelyn Smith-Hillman
Lecture overview
Note the limitations of R2;
Set out and apply the formula for
hypothesis testing (individual partial
regression coefficients and joint); and
Set out and apply co
Assumptions of the OLS
Model
ECN2014 Data Analysis for
Economists
Lecture overview
What lies behind econometrics?
Understanding fundamental principles and
concepts
Probability distribution [or density] function;
The main moments [average and variance]