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Data Theo ry Unrestricted Model t-statistics Restricted Model (excludes independent variables with low t-stats) F-statistic
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Unrestricted Model. Data. Theory. t-statistics. Restricted Model (excludes independent variables with low t-stats). F-statistic. Unrestricted Model. Data. Theory. Examine t-statistics. Restricted Model (excludes independent variables with t-stats below critical-t). - PowerPoint PPT Presentation
Transcript of Data
![Page 1: Data](https://reader035.fdocuments.in/reader035/viewer/2022072013/56812c79550346895d912079/html5/thumbnails/1.jpg)
Data TheoryUnrestrictedModel
t-statistics
Restricted Model(excludes independent
variables with low t-stats)
F-statistic
![Page 2: Data](https://reader035.fdocuments.in/reader035/viewer/2022072013/56812c79550346895d912079/html5/thumbnails/2.jpg)
Data TheoryUnrestrictedModel
Examine t-statistics
Restricted Model(excludes independentvariables with t-stats
below critical-t)
F-statistic
F<Fcritical => do not reject H0F>Fcritical => reject H0
Finished Model
lower the critical-t
![Page 3: Data](https://reader035.fdocuments.in/reader035/viewer/2022072013/56812c79550346895d912079/html5/thumbnails/3.jpg)
Data TheoryUnrestrictedModel
Restricted Model(excludes independentvariables with t-stats
below critical-t)
F-statistic with H0: excluded variablesdo not belong in model
F<Fcritical => do not reject H0F>Fcritical => reject H0
Finished Model
lower the critical-t
Are t-statisticscorrect? Test for•multicollinearity•heteroskedasticity