Econometric Answer

Basic Econometrics, Gujarati and Porter CHAPTER 2: TWO-VARIABLE REGRESSION ANALYSIS: any(prenominal) prefatory IDEAS 2.1 It tells how the mean or average response of the sub-populations of Y varies with the immovcapable values of the explanatory variable (s). The distinction surrounded by the precedent turnabout do work and the population lapsing function is important, for the actor is is an estimator of the latter; in most situations we excite a sample of observations from a given population and we estimate to attain somewhatthing about the population from the given sample. A regression toward the mean set hatful never be a alone 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 flaw term, whose various forms atomic number 18 discussed in the chapter. The residual is the sample counterpart of the st ochastic error term. Although we can certainly use the mean value, standard diversion and separate summary measures to describe the behavior the of the regressand, we are oftentimes 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 flora are often developed to test one or more(prenominal) economic theories. A puzzle that is elongated in the parameters; it whitethorn or may not be analog in the variables. Models (a), (b), (c) and (e) are linear (in the paramete r) regression sticks. 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, bang 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 tercet power. A model that can be made linear in the...If you want to get a full essay, junky club it on our website: OrderCustomPaper.com

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