Disturbances in the linear model, estimation and hypothesis testing (eBook, PDF)
C. Dubbelman
eBook, PDF

Disturbances in the linear model, estimation and hypothesis testing (eBook, PDF)

Estimation and Hypothesis Testing

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1. 1. The general linear model All econometric research is based on a set of numerical data relating to certain economic quantities, and makes infer ences from the data about the ways in which these quanti ties are related (Malinvaud 1970, p. 3). The linear relation is frequently encountered in applied econometrics. Let y and x denote two economic quantities, then the linear relation between y and x is formalized by: where {31 and {32 are constants. When {31 and {32 are known numbers, the value of y can be calculated for every given value of x. Here y is the dependent variable and x is the exp...

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