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Econometric 1

Econometrics

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16 views2 pages

Econometric 1

Econometrics

Uploaded by

isaiahmpapi
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Economic models are models of economic behavior derived from economic theories,shows the

relationship between two variables.And econometric model is an estimate formulation of theoritical


relationship.

Experimental data are data type often collected in laboratory environment in the natural sciences
which are difficult to obtain Ina social sciences.And Non experimental are data type which are not
accumulated through controlled experiments on individuals,firms or segments of economy, sometimes
this data type is also known as Observational data.

Cross sectional data set consists of a sample of individuals,households, firms, cities and states or a
variety of other units taken at a given point in time,such as census of population conducted every after
10years.And Pooled cross sectional data are elements of both cross section and time series data.

Time series data are data type consists of observation on a variable or several variable collected
over a period of time.This may include stock prices and money supply.And Panel data special of Pooled
data in which the same cross section unit is surveyed.It is necessary to study same sample overtime.

Simple linear regression model is the model that shows the relationship developed between only
one dependent variable against only one independent variable.Example Y=B1+B2x+u.And Multiple linear
regression model is the model shows relationship developed between only one dependent variable
against many independent variables.Example Y=B1+B2x+B3x...

Correlation is determination of degree of relationship between two or more variable.And


Regression is determination of statistical relationship between two or more variables.

Coefficient of determination a statistical measure Ina regression model that determine the
proportion of variance in the dependent variable that can be explained by independent variable, that's
R2.And Coefficient of correlation measure the strength of linear association between two random
variable,which when one variable increases as the other increases the correlation is positive and when
one decreases as the other increases the correlation is negative.

Population is a set of all objects for a particular study.For instance if a person wants to study the
weight of fishes in the ponds,the population will be all fishes in the ponds.And Sample is a part of
population selected by using some sampling procedures.For instance one wants to study the weight of
fishes, researcher may take some fishes for the study which are samples for the study.

Random variable is the variable which represents the outcome of a trial on experiment or
event.And Random sampling is part of sampling technique in which each sample has equal probability of
being chosen,sample chosen randomly is meant to be unbiased representation of total population.

Estimate is the numerical values obtained by estimator in an application,which non random.And


Estimator is simply a rule or formula that tells how to estimate the population parameters from
information provided by the sample at hand,Estimator is random.Example
Explanatory variable is the variable manipulated to determine the value of dependent variable.And
Explained variable is variable that represent the outcome one wants to measure.Also known as left
hand side variable.

Endogenous variable is variable that is influenced by changes in another variable.Due to complexity


of economic systems.And Exogenous variable is variable that is not influenced by changes in another
variable.

Gauss Markov assumptions are set of conditions that must be met for ordinary least square
estimator to be the best linear unbiased estimator.(BLUE).And Gauss Markov theorem states that"under
certain conditions the ordinary least square estimator is the best linear model we can use.

Homoskedasticity refers to a condition in which the variance of residual in a regression model is


constant.Thats means the error term does not vary much as the value of the predictor variable
changes.And Heteroskedasticity refers to a condition in which residuals are observed to have unequal
variable.analysis results may be invalid.

Linearity is a situation which implies that one unit change let say X has the same effect on the other
unit Y regardless of the initial value of X.And Non linearity is a curved function of X variable or variables
that is used to predict Y variable.

Gurajati,D.N.(2004).Basic Econometric.McGraw Hill,New Delh,4th and 5th ed

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