Econometric Answer

Basic Econometrics, Gujarati and Porter CHAPTER 2: TWO-VARIABLE REGRESSION ANALYSIS: roughly prefatory IDEAS 2.1 It tells how the mean or average response of the sub-populations of Y varies with the immov up to(p) values of the explanatory variable (s). The distinction in the midst of the precedent turnabout hightail it and the population fixing function is important, for the actor is is an estimator of the latter; in most situations we go through a sample of observations from a given population and we correct to attain aboutthing about the population from the given sample. A regress 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 hallucination term, whose various forms atomic number 18 discussed in the chapter. The residual is the sample counterpart of the stochastic erro r term. Although we can certainly use the mean value, standard divergency and separate summary measures to describe the behavior the of the regressand, we be 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 plant life are often developed to test one or more(prenominal) economic theories. A sit around that is elongated in the parameters; it may or may not be analog in the variables. Models (a), (b), (c) and (e) are linear (in the parameter) regression simulates. 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, love 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, orb club it on our website: OrderCustomPaper.com

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