1) What is residual sum of squares in a regression? 2) Suppose you are estimating parameters of the following regression model: Ŷt= XXXXXXXXXXX 2t XXXXXXXXXXX 3t XXXXXXXXXX) R2= 0.87, RSS = 10310 (The...

1) What is residual sum of squares in a regression?

2) Suppose you are estimating parameters of the following regression model:

Ŷt= 9941 + 0.25 X_2t+ 15125 X_3t

(6114) (0.121) (7349)

R2= 0.87, RSS = 10310

(The figures in parentheses are the estimated standard errors. RSS are residual sum of squares.)

(i) Comment on the explanatory power of the regression.

(ii) Using t-tests show whether individual coefficients are significantly different from zero at 5% level of significance.

(iii)Test whether the coefficient of X2issignificantly different from 1 at 5% level of significance.

(iv)Carry out an appropriate test to check ifcoefficients are jointly significant.