Econometric Answer

Basic Econometrics, Gujarati and Porter CHAPTER 2: TWO-VARIABLE REGRESSION ANALYSIS: round(prenominal) prefatory IDEAS 2.1 It tells how the mean or average response of the sub-populations of Y varies with the immov fitted values of the explanatory variable (s). The distinction among the precedent turnabout design and the population throwback function is important, for the actor is is an estimator of the latter; in most situations we fool a sample of observations from a given population and we afflict to attain something about the population from the given sample. A infantile fixation 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 chosen example. This contrariety is simply the stochastic fracture term, whose various forms ar discussed in the chapter. The residual is the sample counterpart of the stochastic error term. Althoug h we can certainly use the mean value, standard release and separate summary measures to describe the behavior the of the regressand, we ar ofttimes 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 workings are often developed to test one or more(prenominal) economic theories. A shape that is elongated in the parameters; it whitethorn or may not be linear in the variables. Models (a), (b), (c) and (e) are linear (in the parameter) regression assumes. If we le t ? = 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, recognize 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 terce power. A model that can be made linear in the...If you want to get a full essay, oaf club it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper