Question: Consider a classical linear regression model y; = Bo+B1x1 + B2x12 + B3x13 + u. For a sample of 104 observations, regressing y on

Consider a classical linear regression model y; = Bo+B1x1 + B2x12 +

Consider a classical linear regression model y; = Bo+B1x1 + B2x12 + B3x13 + u. For a sample of 104 observations, regressing y on x1, x2, x3 and a constant gives 70 as the sum of squared residuals. We would like to test at the 5% significance level the null hypothesis B1+2 + 3 = 1 against the alternative 1 + 2 + 3 1 by comparing the SSR from restricted and unrestricted models. a) Write down a restricted regression model. What is your new dependent variable? What are your new regressors? b) Suppose that the model in (a) yields SSR = 80. Test the null hypothesis.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Mathematics Questions!