# Shared Flashcard Set

## Details

Econometrics
Introduction to Econometrics
16
Economics
09/22/2011

Term
 CLRM Makes 7 Assumptions
Definition
 1)Model is Linear in the Parameters2) The X Variable is Uncorrelated with the U disturbance term3) E(u/Xi) = 04) Each ui variance is homoskedastic (constant)5) No correlation between two error terms6) No specification bias (all relevant variables included)7) ui is normally distributed (mean 0, variance sigma^2)
Term
 Formula for OLS
Definition
 min(b1,b2,b3)Sigma(e^2) = RSS = Sigma(Yi - b1 - b2x2 - b3x3...)^2
Term
 Goodness of Fit/R^2 equation
Definition
Term
 t-stat equation
Definition
 (b2 - B2)/s.e.(b2)
Term
 Partial Regression Coefficient
Definition
 Reflects the (partial) effect of one explanatory variable on the mean value of the dependent variable when the values of other explanatory variables included in the model are held constant.
Term
 Coefficient of Determination
Definition
 The proportion in variation of the dependent variable explained by all independent variables in the regression model.
Term
 Multicollinearity
Definition
 Multiple (exact) linear relationships exist between variables in an estimated multiple regression function.
Term
 Linear Equation
Definition
 Y-hat = b1 + b2x2
Term
 Log Linear
Definition
 lnY = B1 + B2LnX (elasticity)
Term
 Semi Log
Definition
 LnY = B1 + B2X2
Term
 Lin-Log Model
Definition
 Y = B1 + B2LnX2
Term
 Reciprocal Model
Definition
 Y = B1 + B2(1/X)
Term
 Cubic/Binomial Model
Definition
 Y = B1 + B2X + B3X^2 + B4X^3
Term
 Dubin-Watson Statistic EQN
Definition
 d= (Sum(Et - E(t-1))/(Sum Et^2) ord approx = 2(1-p) (p: Covariance of Et & Et-1
Term
 Correct Variance Methods (3)
Definition
 1) Divide through by SQRT variance2) Divide through by SQRT of X3) Divide through by X
Term
 Dummy Variable Regression Iterations (4)
Definition
 1) Coincidental Regression2) Concurrent Regression3) Parallel Regressions4) Dissimilar Regressions
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