when deriving the formula for the least squares estimates of veta0 and veta1 from the following population model:
yt=veta0+veta1(xt-xbar)+ut
do you have to do anything different seeing as its normally just Xt not Xt-Xbar.
What im thinking is that you do the normal process for deriving the least sqaure estimates, however wasnt sure because of the Xt minus Xbar
also I dont know how to insert symbols and formula hence what I have written, I hope its understandable
Hi thanks for that but I need to derive the formula for the estimates veta0 and veta1.
The normal formula when the regression is Yi=veta0+veta1Xi+ui is the following:
the intercept estimate (veta0) is
veta0=Ybar-veta1xbar
and the slope intercept (veta1)
veta1= sum of(xi-xbar)(yi-ybar)/sum of (xi-xbar)squared
Whats confusing me is that the regression model i have been given is
yt=veta0+veta1(xt-xbar)+ut
the fact that its not just Xi after veta1 is confusing me, I dont know if i can just use the formulas for the estimates that i used about or because its xt-xbar do i need to do something different when deriving my forumlas for my estimates?