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Verball m. (20l7) A Guide to Mucn Eonomd-

5 dtion

frapechts matvix operdioms

QUTSher
Gek the ivtse OP A

A - 2 3

he invese se_itk a non - S a r e nabn

A n-sjuare natrix has cdkfered numiser dus ad wlomns

A mutvix i an avungmd op lunuts rous
and olumns we are dialinqwith RxC

xC Ovzur a mitix -teue Ho how m a

euunts i he matriX
Cond PIL4S
Bead Su Tea lo TeaPdvS

Cso
00
20 290
2 2
S10
2
to20
S
SuO
3 2
To muwT
inutvixS

63 3X d

LConfumasle

Sclutio
 ASSi9ONt

(Stata)
Dease> WAGESL daboset Ecda
g
atloge n
om-studio R-shudy
and Cone to a
and ca wage dta

In Stata |R daa is sord in matvixes.

The olumn pHsos the vanasle.

The row iS &e Unit or thsEvation

5binano o doom

i j i n the u u and
JColumn

Additlon op matmxes- |o Sum maties y should e

Sa i2e

Mtiplitabion Scado-s 1f A_ i a motix of sTe mxn and

C a
Salor, then cA s a matik o0p sie m ín

Veckor- is ethe a ouD matriK o a olumn matviá

Matnx multipli(aho iP A is u motnx Of sire mkn and 6

IS matrix o sienxP, ten he product A a
madrix of Sile
mp

Vectors a vftor op enqtlh n (an e Lratd as a madx

0P S12e oxl, and h e optrdions opvrctor addittoin mulbplitdo
Scodd6, ad mutiplynqa madik -y a vttor a g
bh the otspondin motix operubiang
Exompleso vedos D IS221 64 15 o

E (10
72
 m:[,Y,
K

hena vrtos btone mocdnk

X

b o t a vtor
and matvix.

runspose: a matx i j toNpose Leuo j

tunspese
iS a matX qP size mAn, then its teapose
f
A S a mdrix S nam

i ty mutvix: In t e nxn ideity matrin, iir diagonal

elunuds are o 1 nd ik 0fpdiagana elumunks ove

ao O a diaqonad moadvik s a matia where te

mdi diaqonal ekunant.s e d h ave not eqpad

to 0 byfdiagrol ittns epad fo 0.
 on devl 4 adx oe wose
d.od luninds to
3 wt Moltiodio
3
The
thad
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t du
Zeo mod ivvespecki»e sne
cleminds ave o

Sinquio matvix madrix whse duttrmiant IS2enD

A Oct (A)-o
- 4 L u (ase

Va 2,
3

Singor malx

yomp
De A tO raw d olumns o-e
lhafoy idpecut
oth mtx

lavse A
asqAR mat, e its aese A
sa Se. Not even qnd mudvin ag
vte(1he muts tha Lav invUst qre cakd
v b l e)

(A BA (As sA
(AG)8"A. Taile UtC
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miurttp t t u

6
Tn

78 5
mir-t u stt S tvTC

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dut~to
att rach,
eah oter colum

H 67 HT 7
18 5 3 5

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Capita ces
Nole

multy unspolr
XX

ASgid
Arad hom statsticad nototio to madix nutatio nq
olumn vectors
 3

isticad notation o Mati

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Considt e vttovc

and X
3
n

11 1 In

n J- ordur of tLe
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nXn.
Row ettov by Column vetto

L
 Y- y'y

YY
L

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n tvix

vauignce tovtviúnt ox

YY a srado t

YY san nxn madix

Suppeser Lave

X
Y
 XY (Y,
,TAyat

X -S(alo (uie digit ts one

dinunsiCnd)

LXn

Quetlon
XY=Yx
isXY ond YX a matvix ov a sala

Suppose yjou Ldv

1 epealrd n-tun

n-w'w T . I+1+)+.-+

time
If
and

n n

X u n n s

a 2

Xz
Y= y2

in 2n

C12 1

mo
X hat operations woJd podole

b 2xi m u H p

X A
x'=T 2
n 93

to 2*2 maka'
 Symrehu (ad, Sne x'x

X
hod X'x
13
I 3 13

X'X 3 2xi 2

13

TopiCKevitu 0f DLS Stimation.

oLS OrdinaLst Sqwa

OR Ovewic (lossicad Linfav

we estimaue the mude)yXp 4U

we
Y=9
2
avnGle

Chata it akoahal
o'mn on 1s
a
a do
x 2 22 ...
u2
X13-23 XK3

Xin X2n kn
 U
Res doal

Lun
(G)
Esimaled g Reridual obserd vae
vawe of

of

y - bias
y Eor

hente do n o
(dage rdod

3n.CIn

x itt an1depended vwiab elna

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viies

4
nxl
nxk na
 21
1 2
X3 13

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Kandon

NG. Stedsticad sftuns stidee de cofum of 1

Xto osture the lnstQnt tem)-

-delemnst

ucoanie tcefontiE antq1

Sit can e nctd + tdiidoils sheve

2 Indiv.dudy 4 Sane slope fuaulos

 Our poblon u to Cstimat he eupts and t e slope
Puumuers . OLS one the siugies estimat
tmating tng
these LetasThe resutng Setas arc non as

bela-Ls oLs) Bos ú astaintd tvogh a

minimi 2Gtion of 4e som of sqwaed esi duads

U
boides

To Condut s miimzakion he following amptioas

are mack

aauss- MavlLov AssMphionk

The mtan 0P idw O EUFo

E.]
E
Lun

Deviotion above and Leloo the le st t

SUmtozeo

2Theresdwad has onstánt variana (homorly dastidky) ancl

d i voviou vesiokwas ave unrtatt d (No atocoelotion)

wnre S vanun&
and
idertity madiix
L xo

vdnan(cvdnanu SVV.
miX
 ,
,

nx1n

Deinitios
vav(x) E E(
:E[x-e
tSdestlun

vax(u) E u¬(u)b [uo

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covliu)= e (-e(9)g-el,)
4ut (,): ¬(0,)o

O x0 O

E[u.-E[]=«*
t hue tuo defrttos wt bae

O O

o0 . O
 Lunfuv *oru

Geh tht h a s a 200 mon and a Cosluy

6 wesualk say Anat

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i) MatXX
XiS a fuil rank mtr X Thut &
Rank XK. mcans X hasK ineoly Incerdrs
Columns lintavly ndpendna mednsho wlumn g
amolhple e oter No tolum u owelatrd
whh Onother. 1 the K columns are unclard
t have no muitiollineaia
2 IApndud

Lo o o
Nnber
non- 2et

o-2 IP RanK X < numsr y og

hn te mctix nok full vunl

we do
ndt Lave litav dependune etwen
rous and olumns

m in
4-w
or

mCqnC3
 Det (x) 0

o
(o /6)/o, 3(6

an Xis less Lan we have liheav dependenas

bekwtn he variables This moles X a singular

matvix ( Zeo detom.an nan-inve4ble). Under 4s

iwmstane we Cannotetimate he Bekac. Ahuall
stata wipocwa_u w a r slnqulav matvix o o

Soppose

L
- toek
boqaci

an X3

D XB0
Det =+\. can fid iivese

w EXU0 The 's ove toly exogrsus huy

are delermin istic . The ave noun with au/tanty
The indperdut voriasla ave unlorvelakrd with U

The dstvibt ion op Y ú Knaon

Aecall *
Dektministic-

tasy o se that if U~(0,6) 4Lea

o,
 to . a e dot
Xs ave ovthapna
pradout o Xs ad uú ze

momit ditiohs
N: Ths wi pvovide the method p moreds)
estimadug mmGeuralard
vSee 2

DeivG oLsuhq matvix algebiu.

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ota teBektar
U U'9 vaianu Covaianu makriX of
J'O s vm of sqwared resi dwalss

Rcad (K-) dperdun

nindidoals wit
Y

then Y-xp
0 (-x)' (y-xf
- -(y-)
A
Y--pxy x
Becau 4hod (a')°=A

2
 sapat vesidwals then
P oLs minimi2e 4he sUm

(0)-o
ropetics matiK (aleolus

f a a column matyix q onstants 1 d(a'k) - a

a
a'x)a X|
a
(x'a a n

a'x'2aXi =ax +art..t

(a-a
If A and X 0e matvius then

('AX)- (AxA)X i0rle

X

unrpoie arcd

A U Summetita en

'A) 2AX
 O0-1'Y-2xY
)-o 2'Y 2 (x6o

2 2xY

KXY
Pus *]*y

Quc hion ( (vanphe )

ge te lauanq ptal jamekto
Cons id e followmy Dako Samplng ouu (6SP)

2X: ,
You ge Ilowqop1 foman
3
-5 -4, y 2[2 1- ]'
Esthimak. od P y oLS

2
u

0
 2 2

2Y 2

Lowection
In Const wtig X

2
oLs X2 x

easN)Xxy
2 u
2 2-

212
o

os

2.8X2
stimak oLs USq staka-

Suppase thce data sampling pous wos 2Xai 7¬i

C he madd had o lstant
we wouldn't add the olums i

Estimate 2 in
Estimale tqstota

2-82 <staho

Po- ) *Y
Our Der DSP has no ontant

X
2
 28
x'Y 2 -1-2)

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om_ erw stata

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findit ouhrta2
hen RK

cd Pots tLe location uhirt you ww to Sae Stata ke

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Si2ewhat u he
hriu An inrtore nlotSiie w irrtore

e
e p S S78 lding al oter jada

Pparties of os (fus)
BLUE
best
Linear
Upbiasrd

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stimalrd alve eqols t e valwe

de Knouo that oLs (*'*) "YY

we also inou ha

Pos (x*) *[x6+A

an
1diri (x')xx6 (X'xS"*'u

Cn (4
eAants hhu
awutot
e(fau[6).**) d o n t talk cKKstukes

htEa a ifa is a Constant

man Ledug o