Economic statistics

Question 1

Which are the steps for showing how a confidence interval problem is solved?

Answer 1

1. Question, definition of stochastic variable(s), population(s) and sample(s). What is known?
   Variables:
   Given:
   Wanted:
   Data:
2. Necessary statistical model assumptions.
3. Estimator(s) and sampling distribution.
   “A suitable estimator for… is given by…”
4. Use sample data to calculate the confidence interval.
   “From 3 it follows that…”
5. Interpret the result.
   I.e. “explain the answer in words”

Question 2

Which are the steps for showing how a hypothesis testing problem is solved?

Answer 2

1. Question, definition of stochastic variable(s), population(s) and sample(s). What is known?
   Variables:
   Given:
   Wanted:
   Data:
2. Necessary statistical model assumptions.
3. Hypotheses and significance level.
4. Test statistic and its distribution under H0
   “As the sample size is ‘big’ (n > 30) the CLT gives us, under H0, that…”
5. Decision rule.
   “At the X% significance level the decision rule is… ‘reject H0 if…’”
6. Use sample data to calculate the observed value of the test statistic and draw a conclusion
7. Interpret the result.