ABSTRACT
This chapter summarizes some of the key concepts in estimation and hypothesis testing that arise in statistical and econometric work in economics. Section 19.2 discusses estimation, unbiasedness and efficiency. The behavior of sequences of random variables in terms of long-run averages and the distribution of such averages is considered in Sections 19.3.1 and 19.3.2. The fact that the mean of a sequence of independently and identically distributed random variables has a statistical distribution approaching a normal distribution is an important observation used in hypothesis testing. Hypothesis testing is discussed in Section 19.4. Finally, these techniques are applied in the context of econometric models in Section 19.5.
