Introduction to Econometric Methods - Multiple Regression Analysis

These flashcards cover key vocabulary terms related to binary regression analysis and econometric methods from the lecture.

Binary Variables

Variables that take on only two values, typically 0 and 1.

Dummy Variables

A type of binary variable that is used to represent categorical information in regression models.

Linear Probability Model (LPM)

A regression model where the dependent variable is binary, interpreted as the probability of the event occurring based on the independent variables.

Intercept

The constant term in a regression equation that represents the expected value of the dependent variable when all independent variables are equal to zero.

Collinearity

A situation in regression analysis where two or more independent variables are highly correlated, potentially leading to unreliable estimates.

Heteroskedasticity

A condition in regression analysis where the variance of the error terms varies across observations, violating the assumption of constant variance.

Response Probability

The probability that the binary outcome variable equals one, given a set of independent variables.

Ordinal Variables

Variables where the order of the categories is meaningful but the distances between them are not.

Interaction Effects

Effects in regression models that occur when the impact of one independent variable on the dependent variable depends on the value of another independent variable.

Null Hypothesis

A statement in statistical testing that assumes no effect or no difference, which is tested against an alternative hypothesis.