Econometrics Essay Example | Topics and Well Written Essays - 750 words

Econometrics - Essay Example The classical linear regression model is written such that the coefficients of the independent variables measure the sensitivities of the dependent variable on the independent variables. It is usually assumed that there is an error term which measures the unexplained variance of the dependent variable that is not accounted for by the independent variable. Therefore, only a proportion of the variance is explained by the regression analysis. c) Any particular normal distribution can be related to the normal distribution because the normality assumption allows us to perform statistical tests concerning the estimated parameters using the normal distribution and related tests involving chi-square, t-distributions and F-distributions. d) It is not appropriate to take natural logarithms of interest rates, expressed as percentages because natural logarithms of interest rates are taken to minimize autocorrelations and render the interest rates scale free. However, interest rates expressed as percentages are scale free and uncorrelated already and therefore there is no need to take natural logarithms again. e) The Durbin Watson statistic can be used to estimat... (http://pages.stern.nyu.edu/churvich/Forecasting/Handouts/DWTest.pdf) 2. a) Omitting a significant variable from a regression analysis overstates the marginal impact of other variables in the model. For example, lets consider the impact of education on earnings. This relationship can be written in the form of a regression model as follows: (1) (Greene, 2003: p. 9). The above regression neglects the possibility that most people have higher incomes when they are older than when they are young, regardless of their education. (Greene, 2003: p. 9). Thus overstates the marginal impact of education on earnings. If age and education are positively related, then the regression model will associate all the observed increases in income with increases in education. Therefore a better way to study the determinants of income is to include the effects of age in the regression as follows: (2) according to Greene (2003: p. 9) earnings tend to rise less rapidly in the later earning years than in the early ones. To accommodate this possibility, the above model can be extended as follows: (3) (Greene, 2003: p. 9). b). Regression analysis studies the relationship between two or more variables. One variable is considered independent while two or more variables are considered to be independent. (Anderson et al, 2005). The aim of the regression analysis is to measure how changes in the dependent variable are explained by changes in the independent variables. Including an insignificant variable as one of the independent variables may minimize the effects of the actual variable causing the variation in the independent variable. Like in the example above, if truly age is not a determinant of income as

Research Essay Example | Topics and Well Written Essays - 1250 words - 1

Research - Essay Example He also feels this especially towards Biff who he thinks was doing particularly well until he went on to campus and failed his mathematics and thus never finished it. The psychological context is also brought out by the fact that Willy’s family and friends feel that he is losing his sanity (Miller 15). Happy and Biff discuss the mental degradation of their father but do not bring this out to him since they feel that he would not accept what they are telling him, his wife Linda is also aware of his mental problems but won’t tell him either because she is trying to unite the family which already appears on the verge of splitting up. Willy’s problems do however show themselves when he gets into an argument with his boss Howard over the rejection of his application for a town job. Willy loses his temper over a trivial matter showing his volatility and the dangers of depression. Willy’s spiral into depression is also shown by his constant hallucinations. He con stantly hallucinates of his past years of success such as 1928 when he was driving a red Chevrolet (Miller 13) of having conversations with his older brother as well point to his dementia. The constant hallucinations are thought to be a defense mechanism for the harsh realities that he is facing and were to prevent the onset of full scale depression, this however is not avoided as at the end of the play he still succumbs to it and commits suicide. Several factors are responsible for this depression the most important being his denial of the reality that he is not as successful as he imagines himself to be, and that Biff was never the successful football player that he imagines himself to be The success that Biff had was instead a touchdown that he scored while in high school. Willy’s imagination of success is shown when he goes to confront Howard’s father about his sacking citing the time in 1928 when he earned an extremely large bonus, he defends himself towards his b oss by citing the time twenty years ago when he found financial success and this is what he uses as his defense to have himself reinstatedâ€Å". The play is set in 1949 showing that Willy’s peak are twenty years past and yet he still clings on to them to prevent his acknowledgement that he is not as successful as he dreams(Miller 82). The theme of unrealistic parental expectations is constantly shown in Willy who believes that his son Biff is a failure, he wants his son to take up a job as a salesman and constantly berates him for not, he keeps reminding him about his high school successes and clings on them as proof that Biff has potential. He also keeps pressuring Bill to marry as he says that he was popular with everybody both boys and girls but as Linda points out Biff is rough with women and so it is difficult for him to settle down (Miller 31). The relationship between Linda and Happy also show how her expectations of him are more than what he can be even when trying, she complains that Happy should be doing more with his life and yet Happy is constantly providing money for her and Willy to use to supplement his income. Happy also has motivation to succeed and wants to become the manager of his store however