# Shared Flashcard Set

## Details

ExamII
ExamII Flashcards
27
Economics
04/07/2013

Term
 Heteroskedasidity
Definition
 Observations with different . You are less certain how a change in a High variability. determinant will affect the variable. (Rich people in the food expenditure example)
Term
 Homoskedasticity
Definition
 Observations with same variances. Low variability.You are more sure of how a change in a determinant will affect the variable. (Poor people in the food expenditure variable)
Term
 How to determine Heteroskedasticity
Definition
 If there are a shit ton variab les far away from the line of regression. The least squares assumption is violated.
Term
 Hausman Test
Definition
 tests whether random effects estimation would be almost as good. In a fixed-effects kind of case, the Hausman test is a test of H0: that random effects would be consistent and efficient, versus H1: that random effects would be inconsistent.
Term
 Ordinary Least Squares
Definition
 method for estimating the unknown parameters in a linear regression model--minimizes the sum of squared vertical distances between the observed responses in the dataset and the responses predicted by the linear approximation
Term
 Multicollinearity
Definition
 Multicollinearity is a statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated,
Term
 Wald Test
Definition
 the Wald test can be used to test the true value of the parameter based on the sample estimate.-suppose smoking multiplies the risk of lung cancer by some number R: then the Wald test can be used to test whether R = 1 (i.e. there is no effect of smoking) or is greater (or less) than 1 (i.e. smoking alters risk).Wald test uses two approximations (that we know the standard error, and that the distribution is chi-squared),
Term
 augmented dickey fuller
Definition
 is a test for a unit root in a time series sample.The more negative it is, the stronger the rejection of the hypothesis that there is a unit root at some level of confidence
Term
 Endogeniety
Definition
 a loop of causality between the independent and dependent variables of a model leads to endogeneity.
Term
 error term
Definition
 error of an observed value is the deviation of the observed value from the (unobservable) true function value
Term
 residual term
Definition
 residual of an observed value is the difference between the observed value and the estimated function value.
Term
 Sargan
Definition
 test to see if you got rid of endogeniety.
Term
 Heteroskedasidity
Definition
 Observations with different variances. High variability. determinant will affect the variable greatly.(Rich people in the food expenditure example)
Term
 Homoskedasticity
Definition
 Observations with similiar variances. Low variability.You are more sure of how a change in a determinant will affect the variable. (Poor people in the food expenditure variable)
Term
 How to determine Heteroskedasticity
Definition
 If there are a shit ton variables located far from the line of regression. The least squares assumption is violated.
Term
 Hausman Test
Definition
 Tests whether random effects estimation would be almost as good. In a fixed-effects kind of case, the Hausman test is a test of H0: that random effects would be consistent and efficient, versus H1: that random effects would be inconsistent.
Term
 endogeniety
Definition
 A variable is said to be endogenous when there is a correlation between the parameter or variable and the error term.
Term
 reasons for endogeneity
Definition
 OutlineEndogeneity and Instrumental Variables RegressionExistence of Endogeneity and Evaluating IV'sPanel Data and Fixed E ectsWhat is Endogeneity?What To Do About It?InstrumentsWhat is Endogeneity?IEndogeneity can be caused by three circumstances1.Omitted Variables2.Measurement Error3.Simultaneity
Term
 Heteroskedasidity
Definition
 Observations with different . You are less certain how a change in a High variability. determinant will affect the variable. (Rich people in the food expenditure example)
Term
 Homoskedasticity
Definition
 Observations with same variances. Low variability.You are more sure of how a change in a determinant will affect the variable. (Poor people in the food expenditure variable)
Term
 How to determine Heteroskedasticity
Definition
 If there are a shit ton variab les far away from the line of regression. The least squares assumption is violated.
Term
 Hausman Test
Definition
 tests whether random effects estimation would be almost as good. In a fixed-effects kind of case, the Hausman test is a test of H0: that random effects would be consistent and efficient, versus H1: that random effects would be inconsistent.
Term
 Endogeniety
Definition
 A variable is said to be endogenous when there is a correlation between the parameter or variable and the error term.
Term
 instrument
Definition
 used to determine causal relationships
Term
 Statistical Error
Definition
 Observed differentiating from (Unobserved)expected value. (does not equal 0 indicating independence)
Term
 residual
Definition
 The difference between the height of each man in the sample and the observable sample mean is a residual
Term
 type 1 error
Definition
 rejecting a null hypothesis that is infact true
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