# This job sums t-statistic and includes a discussion of hypothesis testing.

"The output of an estimated regression equation shows the t-statistic for a given coefficient associated with an independent variable to be 1.99."

Explain the implications of this statement in the context of ordinary least squares regression? Be sure your answer includes a discussion of hypothesis testing.

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#### Solution Preview

For linear regression model: Yt=Î²0+Î²1X1 +......+Î²kXk,t+Ut

Xt is a set of independent variables; Yt is the dependent variable. Î²t are unknown population coefficients; Ut is a disturbance term which captures the error between X and Y.

The estimation of the model is: Yt=b0+b1X1,t +......+bkXk,t +et

Bk is the sample estimate of Î²k; et is the residual.

Here Bk is estimated by minimizing the sum of squared errors, and referred to as ...

#### Solution Summary

The solution explains the implications of this statement in the context of ordinary least squares regression.