Suppose you are estimating parameters of the following regression model: Ŷt = 9941 + 0.25 X2t+ 15125 X3t (6114) (0.121) (7349) R 2= 0.87, RSS = 10310 (The figures in parentheses are the estimated standard errors. RSS are residual sum of squares.) (i) Comment on the explanatory power of the regression and Using t-tests show whether individual coefficients are significantly different from zero at 5% level of significance. (ii) Test whether the coefficient of X2 is significantly different from 1 at 5% level of significance. (iii) Carry out an appropriate test to check if coefficients are jointly significant.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Suppose you are estimating parameters of the following regression model:
Ŷt = 9941 + 0.25 X2t+ 15125 X3t
(6114) (0.121) (7349)
R 2= 0.87, RSS = 10310
(The figures in parentheses are the estimated standard errors. RSS are residual sum of squares.)
(i) Comment on the explanatory power of the regression and Using t-tests show whether individual coefficients are significantly different from zero at 5% level of significance.
(ii) Test whether the coefficient of X2 is significantly different from 1 at 5% level of significance.
(iii) Carry out an appropriate test to check if coefficients are jointly significant.
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