Omitted Variable Bias
Ommitted variables may increase the apparent importance of another variable, damaging the ability to prove causality. Effect of OVB on
1. Find the variable outside of the model
2. Find Corr(ZY)
3. Find Corr (ZX)
4. Multiply the signs
5. If positive, there is an upwards bias ()
Adjusted R2

OLS Wonder Equation

A good model for proving causality has a low , a good model for predicting Y has a low R2

Multiple Variable Tests

Reparametrisation

1.
2. For showing
3. Let
4. Thus,
5.
6. Now, let
7. Thus,
8. Now, run a new regression and do the usual hypothesis tests (: a one sided test). If you can reject H0, then

F-stat tests
Here, the H0 is a joint hypothesis with n restrictions (the number of coefficients equated to 0). 1. Create a restricted regression whereby we assume that H0 is correct 2. We see how the “fit” of the regression changes with the removed variables a.

b.
c. q is the number of restrictions, n the number of observations and k the number of variables 3. We compare this with an Fcrit value (using number of...

...Introduction to Econometrics coursework
For the assignment I will examine whether or not a linear regression model is suitable for estimating the relationship between Human development index (HDI) and its components. Linear Regression is a statistical technique that correlates the change in a variable to other variable/s, the representation of the relationship is called the linear regression model.
Variables are measurements of occurrences of a recurring event taken at...

...Crime Rates: An Econometric Analysis using population, unemployment and growth
Table of Contents
I. Introduction
A.) Background of the Study
B.) Problem Statement
C.) Objectives
D.) Significance of the Study
E.) Scope and Limitations
II. Review of Related Literature
III. Operational Framework
A.) Variable List
B.) Model Specification
C.) A-priori Expectations
IV. Methodology
A.) Data
B.) Preliminary Tests
V. Results and...

...ECO
1 chapter
An overview of regression analysis
Econometrics – literally ,,economic measurement” is the quantitative measurement and analysis of actual economic and business phenomena.
Econometrics has three major uses:
1) Describing economic reality
2) Testing hypothesis about economic theory
3) Forecasting future economic activity
The simplest use of econometrics is description.
For most goods, the relationship between...

...the White test for heteroskedasticity. Form both
the F and LM statistics and report the p values. How does this compare to
your results from (c)? (You can use the command imtest, white to perform
the LM version of the original White test in Stata. Note that this test statistic
will be different from the one you compute for the special case of the White
test.)
(e) Divide all of the variables (including the intercept term) in equation (1) by the
square root of assets. Re-estimate...

...format):
Regressor tradeshare Coefficient 1.34 (0.88) 0.56** (0.13) −2.15* (0.87) 0.32 (0.38) −0.00046** (0.00012) 0.626 (0.869) 1.59 0.29 0.23
yearsschool rev_coups assasinations rgdp60 intercept SER R2 R2
116
Stock/Watson - Introduction to Econometrics - Second Edition
The coefficient on Rev_Coups is −2.15. An additional coup in a five year period, reduces the average year growth rate by (2.15/5) = 0.43% over this 25 year period. This means the GPD in 1995 is...

...Rural poverty remains a critical economic problem in many developing countries. This paper conducts an econometric analysis of data from the 2006 Vietnam Household Expenditure Survey to assess the impact of selected socio-economic factors on the income of Vietnamese households. The data that is used is cross sectional in that it is widely discrete data (such as per capita income) relating to one period or without respect to variance due to time.
Jehovaness Aikaeli,...

...Answers to Selected
Exercises
For
Principles of Econometrics, Fourth Edition
R. CARTER HILL
Louisiana State University
WILLIAM E. GRIFFITHS
University of Melbourne
GUAY C. LIM
University of Melbourne
JOHN WILEY & SONS, INC
New York / Chichester / Weinheim / Brisbane / Singapore / Toronto
CONTENTS
Answers for Selected Exercises in:
Probability Primer
1
Chapter 2
The Simple Linear Regression Model
3
Chapter 3
Interval Estimation and...