Professional Documents
Culture Documents
• Jan Tinbergen
Why Econometrics?
• (i) Measurement of economic relations
• (ii) Verification of economic theory
• (iii) Forecasting
Classical Linear Regression Model
• Assumptions
• (i) Linear regression Model
• (ii) X values are fixed in repeated sampling
• (iii) Zero mean value of the disturbance term (ui)
• (iv) Homoscedasticity or equal variance of the disturbance term (ui)
• (v) No autocorrelation between the disturbance term (ui)
• (vi) Zero covariance between the disturbance term (ui) and xi
• (vii) The number of observation n must be greater than the number of parameters to
be estimated
• (viii) Variability in x values
• (ix) No specification error
• (x) No Multicollinearity