complete question:Suppose you are estimating parameters of the following regression model:
Ŷt = 9941 + 0.25 X2t+ 15125 X3t
(6114) (0.121) (7349)
R2= 0.87, RSS = 10310
(The figures in parentheses are the estimated standard errors. RSS are residual sum of squares.)(A) Using t-tests show whether individual coefficients are significantly different from zero at 5%
level of significance.(B) Test whether the coefficient of X2 is significantly different from 1 at 5% level ofsignificance.
solution
A)H0:β0=0 vs H1:β0=0T=S.D.(β0)β0ˆ−β0Under Null hypothesisT=61149941=1.626H0:β1=0 vs H1:β1=0T=S.D.(β1)β1ˉ−β1Under Null hypothesisT=0.1210.25=2.066H0:β2=0 vs H1:β2=0T=S.D.(β2)β2ˉ−β2Under Null hypothesisT=734915125=2.058
H0:β1=1 vs H1:β1=1T=S.D.(β1)β1ˉ−β1Under Null hypothesisT=0.1210.25−1=−6.19
If T critical is less than the calculated value of T then we reject null hypothesis and conclude that there is significance of thecoefficient '
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