ECO220Y1 Lecture Notes - Lecture 20: Regression Analysis, Homoscedasticity, Statistical Significance
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ECO220Y1 Full Course Notes
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Multiple regression allows us to control for experience, discipline, etc to isolate effect of sex: control for lurking variables. Multiple coefficients because more than one x variable with k explanatory variables. Simple vs multiple regression yi = 0 + 1x1i + 2x2i + + kxki + i k = 1 in simple regression. I explains everything aside from x1, x2 xk that explains y. No simple formula to find coefficients: need matrix algebra or software, ols estimate solves min (yi - i)2, residuals: ei = yi - i, linearity. Each x linearly related to y: errors independent, homoscedasticity of errors, normally distributed errors, constant included, each x not correlated to error. Hypothesis testing: use t test with = n - k- 1, sbj obtained with software, test of statistical significance. 0: h0: j = j, h1: j j, h1: j 0.