Answer to Question #196567 in Economics for afrena

Question

Suppose you are interested in examining the effect of 𝑥 on 𝑦. The sample covers the period of 𝑡 = 1, 2, 3, … , 𝑛.

a) Suggest a research question and write the linear regression model that you would estimate. Define the variables. (30%)

b) State a hypothesis that you can test for the slope coefficient. Explain all the steps and assumptions. (20%)

c) Explain, in your own words, what you understand about using historical data for predictions. Relate your answer to the research question and model in (a). (30%)

d) What is a Type I error? How is it related to the level of significance? Use the information in (c) to explain. (20%)

Answer 1

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