Welcome to our Blog

Stay updated on everything economic. 

 
 
Econometrics: What is the dummy variable trap?
The common intercept value in a linear regression equation is always taken as one. The basis for this is that
What is a correlation coefficient?
The correlation coefficient is used in economics and throughout econometrics to measure the strength of a relationship between two given
Econometrics: What is the Gauss Markov Theorem?
According to the Gauss Markov Theorem, if the first six classical assumptions are met within your model, then the estimates
So, what really is a p-value?
The p-value tells us the lowest level of significance at which we can reject the null hypothesis. What we mean
Econometrics: Classical Assumption 7 – The error term is normally distributed.
According to the Gauss Markov Theorem, an Ordinary Least Squares (OLS) model can be considered as the Best Linear Unbiased
Econometrics: Classical Assumption 6 – No explanatory variable is a perfectly linear function of any or all of the other...
Two variables are a perfectly linear function of each other when one variable can be entirely explained by the movement
Econometrics: Classical Assumption 5 – The error term has a constant variance.
In econometrics, variance can be described as the spread of the data from the average value of the data set
Econometrics: Classical Assumption 4 – All observations of the error term are entirely uncorrelated with each other.
  In econometrics, a fantastic way of observing the relationship between the respective error observations within a given data set
Econometrics: Classical Assumption 3 – There is no correlation between any of the explanatory variables and the error term.
There cannot be any correlation between the explanatory variables present within a given equation and the error term. If it
Econometrics: Classical Assumption 2 – The error term has a zero population mean.
When the intercept term is present in any given regression equation, it forces the average of the error term to
0