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Intuition to Econometrics
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For the simple linear regression model, derive the estimates of the parameters. Using normal equations derive the estimates of constant and slope term
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Derive the deviation form of beta 2 hat (deviation form of slope term)
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Write a simple linear regression model in deviation form
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Regression line passes through sample means of x and y
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Show that the mean value of the estimated y is equal to the mean value of the actual y
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Assuming a simple linear regression model, show that the residuals are uncorrelated with predicted y
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What are deterministic and Statistical relationships? Distinguish between them.
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Distinguish between regression, causation and correlation
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Ordinary least squares
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Why OLS? What is the main property of an OLS estimator?
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Explain the first assumption of CLRM, i.e. 'Linearity of a model'
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Explain the second assumption of CLRM, i.e. ' X values are assumed to be fixed in a repeated sampling'
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Assumption 1: Model is linear in parameters
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Assumption 2: x values are fixed in repeated sampling
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Assumption 3: Error term has a zero mean
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Assumption 4: 'Homoscedasticity'
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Assumption 5:'No autocorrelation'
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Assumption 6: 'No correlation between error term and x's'
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Assumption 7: 'the number of observations n must be greater than the number of parameters to be estimated, k'
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