Econometrics

A Brief overview of the Classical bank billagear regression model. 2.1 What is a degeneration model. In general, a regression is concerned with describing and evaluating the aloneiance surrounded by a given in strung-out variable and a pendent variable. It is an attempt to explain movemements in a dependent variable by reference to movements in independent variables. chase after for YNames for X Dependent variable separatist variables RegressandRegressor Effect variableCausal variables Explained variableExplanatory variables. 2.2 fixing VS Correlation Correlation between two variables measures the degreee of linear connective between them. This says nothing about which variable influences the other. There is alone order for a linear relationship. In a reverse, the X(multiple) and Y argon treated very differentl. Y is as contributeedto be random or stochastic, and to have a hazard distri thoion. X variables argon assumed to be non-stochastic. 2.3 Sim ple Regression When we have a disassemble plot, the regression line is the line through the signs in a way that the vertical infinite between the observations and the regression line is a minimum. It is denoted by y=a+Bx. Because not all points ly on the regression line, we adopt an error term to free for the differences.

Yt=a+Bxt+ut hither the subscript t denotes for the observation numbers.This stand not be done by the so called eyeballing method, but should be performed by ordinary least squ ars, OLS. Two utility(a) estimation methods for determining coëfficients a and B be the method of moments and the method of uttermost likelihood.(discus! sed in CH 8). The OLS takes separately vertical distance from the point to the line, squares it and then minimises the total sum of the areas of squares. (least squares). The reason we take squares is because other than the points below the line would be substracted from the points above. By taking squares we are guaranteed of the total...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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