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Flashcards in Topic 4 Deck (7)
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1

What is the normality assumption? What is this model called?

It assumes the error terms are normally distributed. The model is knwon as the classical normal linear regression model.

2

How justified is the normality assumption.

Not so bad when applied judicously. See central limit theorum

3

What are the applications of the normality assumption?

Gives us the distributions of parameters, and some sweet properties

4

What is the distribution of beta1 hat in terms of the variance?

5

What is the distribution of beta2 hat in terms of the variance?

6

What are the properties of the CNLRM?

- Unbiased

- Minimum variance

- Consistancy (estmates converge to parameters with increasing n) - beta1 hat normally distributed

- beta2 hat normally distributed

- (n-2) (sample-variance)/(population-variance) has a chi-square distribution

- beta1 & beta2 hat both distributed independantly of sample variance

-beta1 & beta2 hat have minimum variance in their the class of estimators, linear or not. Is BUE

7

What is BUE?

Best unbiased estimator