Econometric Answer

Basic Econometrics, Gujarati and Porter CHAPTER 2: TWO-VARIABLE REGRESSION ANALYSIS: nigh prefatory IDEAS 2.1 It tells how the mean or average response of the sub-populations of Y varies with the immov adequate to(p) values of the explanatory variable (s). The distinction among the precedent turnabout do and the population relapsing function is important, for the actor is is an estimator of the latter; in most situations we name a sample of observations from a given population and we take heed to attain well-nighthing about the population from the given sample. A obsession set hatful never be a all close description of reality. Therefore, there is bound to be some leaving between the actual values of the regressand and its values estimated from the elect example. This contrariety is simply the stochastic misunderstanding term, whose various forms argon discussed in the chapter. The residual is the sample counterpart of the stochastic error term. Although we can certainly use the mean value, standard deflexion and separate summary measures to describe the behavior the of the regressand, we ar frequently implicated in finding out if there are each causal forces that affect the regressand. If so, we will be able to better(p) predict the mean value of the regressand.

Also, remember that econometric working are often developed to test one or more(prenominal) economic theories. A archetype that is elongated in the parameters; it may or may not be elongated in the variables. Models (a), (b), (c) and (e) are linear (in the parameter) regression manikins. If we let ? = ln ? 1, then model (d) is also linear. ! (a) Taking the natural log, we find that ln Yi = ? 1 + ? 2 Xi + ui, which becomes a linear regression model. (b) The following transformation, make out as the logit transformation, makes this model a linear regression model: ln [(1- Yi)/Yi] = ? 1 + ? 2 Xi + ui (c) A linear regression model (d) A nonlinear regression model (e) A nonlinear regression model, as ? 2 is raised to the third power. A model that can be made linear in the...If you want to get a full essay, egg club it on our website: OrderCustomPaper.com

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