Write down multivariate linear regression model with 4 explanatory variable using general notations (Yi, β0, β1,β2, β3, β4, X1i, X2i X3i, X4i, and εi) and identify dependent variable, independent variables, constant term, coefficients, and error term. correct answers Constant b0
Independent ...
Econometrics || with 100% Correct Answers.
Write down multivariate linear regression model with 4 explanatory variable using general
notations (Yi, β0, β1,β2, β3, β4, X1i, X2i X3i, X4i, and εi) and identify dependent variable,
independent variables, constant term, coefficients, and error term. correct answers Constant b0
Independent b
Dependent x
Error 2
What is the main difference in the interpretation of the coefficients between single-explanatory
variable regression model and multivariate regression model? correct answers Multi holds all
constant
What is OLS? Why? Provide formula. correct answers Ordinary least squares - minimized the
sum of square residues
Line of best fit , beta 1 hat, beta 0 hat
(look at notes)
What are the degrees of freedom? correct answers N - K - 1 (number of observations, number of
variables)
What is the estimated regression equation? correct answers yhat= beta0hat+(beta1hatx1)+ error
term
What is the meaning of beta 1? equation is in review... correct answers One unit of increase in
X1 on Y, while holding X2 constant
What is the difference between R2 and Adjusted R2? Of the two, which do you recommend
typically using? Why? correct answers Adjusted for degrees of freedom, so it only increases with
meaningful variables
Percentage of variation in Y around its mean which is explained by regression line.
(want as high as possible)
What is the difference between Y and Y_hat? correct answers y is actual and yhat is estimate
What is the difference between Beta and Beta_hat? correct answers beta is true and beta hat is
estimate
Two of the most important econometric concepts to date have been the error term and the
residual. Carefully distinguish between these two concepts, being sure to:
(a) Define both terms.
(b) State how they are similar.
(c) State how they are different. correct answers Error term-covers what we don't know (omitted
variable, measurement error, incorrect functional form, and others)
residual-difference between y and yhat
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