Coefficient of the explanatory variable, Microeconomics

Assignment Help:

Problem:

(a) Why is an error term added to a regression and explain its importance in the OLS procedure?

(b) Suppose we have a linear equation with a constant term, one explanatory variable and an error term, show in details the steps required, using the OLS procedure, to derive the estimates of the constant term and that of the coefficient of the explanatory variable.

(c) Suppose a researcher wants to test whether the returns on a company stock (y) show unit sensitivity to two factors (factor x2 and factor x3) among three considered. The regression is carried out on 144 monthly observations. The regression is: Yt = β1 + β2x2t + β3x3t + β4x4t+ ut

i) What are the restricted and unrestricted regressions?

ii)  If the two RSS are 502.4 and 302.8  respectively, perform an F-test of the restriction, showing all the required steps.

(d) How are the t-test and the F-test related and describe in which cases they cannot be applied?


Related Discussions:- Coefficient of the explanatory variable

Labour Economics, Sally recently finished her full time training and receiv...

Sally recently finished her full time training and received certification as a nurses aid at the end of august.

What do you meant by hoarding, Q. What do you meant by Hoarding? A situ...

Q. What do you meant by Hoarding? A situation in that companies, financial investorsor individual consumers choose to hold hoards of cash or other liquid assets, instead of spe

Assignement, need help for my micro assignment

need help for my micro assignment

Demand, what are tne methots of demand forecasting ?

what are tne methots of demand forecasting ?

International monetary fund, INTERNATIONAL MONETARY FUND: The importan...

INTERNATIONAL MONETARY FUND: The important objectives before the Fund presently are as follows: • To promote international cooperation; • To facilitate the expansion and ba

Price Elasticity of supply, Explain the difference between elastic and fixe...

Explain the difference between elastic and fixed supply

Production function for wheat, Production Function for Wheat *  Farmers...

Production Function for Wheat *  Farmers should choose between a capital intensive or labor intensive technique of production. Isoquant Describing Production of Wheat

Homework questions, If a large amount of skilled labor immigrated into the ...

If a large amount of skilled labor immigrated into the country, which allows the available resources to produce more of goods X and Y, which of the following will occur? A.the y-i

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd