STA3201 : INTRODUCTION TO ECONOMETRICS

Assignment 1 : 5 Marks (Due 27th Feb 2022)

Question 1.

Observe the table below:

X Y
62 8.1
70 9.0
76 9.2
82 10.5
88 10.8
74 9
75 8.1

1. Estimate the relationship between X and Y using the Ordinary Least Squares( OLS) method;
that is obtain the intercept and slope estimates in the regression equation (2 Marks)
2. Compute the tted values and residuals for each observation, and verify if residuals (approx-
imately) sum to zero.(1 Mark)
3. What is the predicted value of Y when X =58 ? (1 Mark)
4. How much of the variation in Y for these 7 observations is explained by X? (1 Mark)