# Shared Flashcard Set

## Details

Stats
Final review
33
Economics
05/12/2009

Term
 Simple regression model
Definition
 1 x and 1 y variable
Term
 Bivariate data
Definition
 2 variables
Term
 Independent variable
Definition
 X, predictor
Term
 Dependent Variable
Definition
 Y, result
Term
 Slope
Definition
 Value of Beta 1 tells you "if the value of x goes up by one unit, you expect y to go up by a certain (slope) amount"Not causation, correlation
Term
 If P value is small
Definition
 slope is 0
Term
 Intercept
Definition
 Beta notdoes not mean a whole lot oftentimes
Term
 Correlation coefficient
Definition
 R value
Term
 Partial regression coefficients
Definition
 They are the change in y expected when u change the x 1 unit, all others held constantBeta 1 hat, beta 2 hat...
Term
 Residual error
Definition
 y-y hathow much you missed it byMethod of least squares adds them all up and creates one unique line
Term
 Assumptions
Definition
 Residual distributed normalIndependent (If you have cross sextional data)mean = 0, constant variance (in between those 2 bars)
Term
 Multicollinearity
Definition
 x values are correlatedcan cause problemsdon't assume they are and then throw them outIf the sign is backwards (-) means they may be tied togetherWill have to illiminate one and keep the othersIf you leave it, it inflates the standard error of the estimate
Term
 Standard error of the estimate
Definition
 how accurate your model is, st. deviation of residualsWant to be small
Term
 Heteroscedasticity (homoscedasticity)
Definition
 constant variance = homo
Term
 Parsimony
Definition
 building the best model you can with the fewest variables you can. You want a good model with 3 than a slightly better model with 5. You run a risk of the variables not being really good when you add ones that help slightly
Term
 R-squared
Definition
 coefficient of determination, tells you how much of the variablility of the y value has been explained by knowing x value. If it is .7, this means that 70% variability of the y values is explained by knowing the x, want to be closer to 1 since that means you are explaining more of the data
Term
 standard error of the estimates (standard deviation of residuals
Definition
 want this to be small
Term
 small p values
Definition
 significant, USE
Term
 t-tests on each coefficient
Definition
 Null hypothesis: Beta=0 (reject if p-value less than alpha)
Term
 Confidence interval on Beta
Definition
 shows 95% confident between 2 pointsPredict only in range of X's in model (extrapolation) extrapolation = ou outside the value of possible x's
Term
 Prediction interval for one specific observation (not for the mean)
Definition
 will be wider interval when you do it on the mean, it will be smaller
Term
 Scatterplots of Y vs Xx
Definition
 What to see if its a straight lineIf not they are not correlated. If they follow a pattern and its not linear, they could still be x^2 or x^3
Term
 Correlations of Y and X's
Definition
 want to be close to 1 or -1, sign means slope is up or down, also use to see if there is multicollinarity. Even if it is low by itself, it is possible that it may be correlated with the other residuals from the other variables. May be significant with more variables
Term
 Histogram of residuals
Definition
 want to check normality, as long as it is not bimodal that's good, you can also see outliers. Do not delete otliers. Would have to convince yourself that it is not part of the population you intend in you data
Term
 Plot of standardized residuals vs standardized Y's
Definition
 Want to see if the residuals are constant. Should be between the 2 horizontal lines. Build 2 models if need be
Term
 dummy variables
Definition
 used for qualitative data. 1 less than the number of categories you have. If you have 5, ucan only use 4. Comparing what would happen if you were in the category with the ones in your base model. Some may fail out if they are not significant
Term
 Transformations
Definition
 say a non linear scatter plot, need x^2 or x^3 logslg:its not x goes up some % and y goes up some %
Term
 lagged variables
Definition
 taking varible in data (dependent) to see if sales this month is correlated to past months. Lag 1 is one period back. Lag 2 is 2 months back
Term
 Regression on time series variable
Definition
 Time series: data collected over a certain time frame. There is an order of what data came first. Intervals have to be the same siz. You are extraplating. Historical datat does not always mean future data. Therefore do not extrapolate too far
Term
 Trend
Definition
 Long term, more than a year (t)=time variable=is used to find trent
Term
 seasonailty
Definition
 short term! based on seasons within a given year. Is there differences in months? In quaters? Most companies have seasonality is some form or another. AC repair, retail. Use dummy variables to see which ones are significant
Term
 Autocorrelations
Definition
 residuals are independent of each other. Used with lagged variables
Term
 moving average methods
Definition
 smoothes the data based on past history. Stock market often uses this
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