KTEE 310 FINANCIAL ECONOMETRICS THE SIMPLE REGRESSION MODEL Chap 4 – S & W 1 Dr TU Thuy Anh Faculty of International Economics ThiN ga nH an g co m ThiNganHang com Output and labor use 2 0 50 100 150[.]
an g co m KTEE 310 FINANCIAL ECONOMETRICS ga nH THE SIMPLE REGRESSION MODEL Chap – S & W Th iN Dr TU Thuy Anh Faculty of International Economics ThiNganHang.com an g co m Output and labor use 300 250 nH 200 ga 150 iN 100 Th 50 10 11 12 Labor 13 14 15 16 17 18 19 20 21 22 23 Output ThiNganHang.com 24 an g co m Output and labor use Output vs labor use 300 250 200 nH 150 ga 100 50 100 120 140 160 180 200 220 Th 80 iN The scatter diagram shows output q plotted against labor use l for a sample of 24 observations ThiNganHang.com an g co m Output and labor use Economic theory (theory of firms) predicts An increase in labor use leads to an increase output in the SR, as long as MPL>0, other things being equal From the data: nH consistent with common sense Setting up: ga the relationship looks linear iN Want to know the impact of labor use on output Th => Y: output, X: labor use ThiNganHang.com an g co m SIMPLE LINEAR REGRESSION MODEL Y Y b1 b X ga nH b1 X2 X3 X4 X Th iN X1 Suppose that a variable Y is a linear function of another variable X, with unknown parameters b1 and b2 that we wish to estimate ThiNganHang.com ... 25 0 nH 20 0 ga 150 iN 100 Th 50 10 11 12 Labor 13 14 15 16 17 18 19 20 21 22 23 Output ThiNganHang.com 24 an g co m Output and labor use Output vs labor use 300 25 0 20 0 nH 150 ga 100 50 100 120 ... g co m SIMPLE LINEAR REGRESSION MODEL Y Y b1 b X ga nH b1 X2 X3 X4 X Th iN X1 Suppose that a variable Y is a linear function of another variable X, with unknown parameters b1 and b2 that... 300 25 0 20 0 nH 150 ga 100 50 100 120 140 160 180 20 0 22 0 Th 80 iN The scatter diagram shows output q plotted against labor use l for a sample of 24 observations ThiNganHang.com an g co m Output