Part 1 - Regression

Question 1

Why do we include a Disturbance term?(2)

Answer 1

1. We always leave out some determinants of yt
2. There may be errors in the measurement of yt
   .

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Question 2

What is usually reported in brackets?

Answer 2

The coefficient’s standard error, often reported in brackets below

Question 3

What is the formula for the test statistic?

Answer 3

z =βˆ − β^* / SE(βˆ)

Question 4

If we reject the null hypothesis at the 5% level, we say …

Answer 4

If we reject the null hypothesis at the 5% level, we say that
the result of the test is statistically significant.

Question 5

yˆ = a + bx ⇒ 1 unit increase in x

Answer 5

increases ˆy by b units

Question 6

yˆ = a + b ln x ⇒ 1 % increase in x

Answer 6

increases ˆy by 0.01 × b units

Question 7

ln ˆy = a + bx ⇒ 1 unit increase in x

Answer 7

increases ˆy by b × 100%

Question 8

ln ˆy = a + b ln x ⇒ 1 % increase in x

Answer 8

increases ˆy by b%

Question 9

Confidence interval

Answer 9

given beta +- SE x critical value