Question

What is the role of the stochastic error term ui in regression analysis? What is the

difference between the stochastic error term and the residual, ˆui?​

Answer 1

Answer:

In a regression model, the difference between actual values and estimated value of regress is called as stochastic error term ui. There are various forms of error terms. A regression model is never accurate therefore stochastic error term play an important role by estimating the difference.

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Answer 2

What is the role of the stochastic error term ui in regression analysis?

The stochastic blunders time period Stochastic blunders  a time period this is brought to a regression equation to introduce all the variant in Y that can't be defined via way of means of the covered X's.

ui suggest in regression -

(The mistake time period β0 increases or lowers the regression line.) - ui is the mistake time period or residual, which incorporates all the. unique, or idiosyncratic capabilities of statement i, including. randomness, dimension blunders, and good fortune that have an effect on its final results Yi .

What is the difference between the stochastic error term and the residual, ˆui?​

An blunders time period represents the manner discovered statistics differs from the real populace, a residual represents the manner discovered statistics differs from pattern populace statistics.

Stochastic blunders time period -

Stochastic blunders time period: random, nonsystematic time period, a random “disturbance,” the impact of the variables that have been neglected from the equation, assumed to have a median fee of zero, and to be uncorrelated with the unbiased variable, x, assumed to have a consistent variance, and to be uncorrelated with its personal beyond values .

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