Question

In: Statistics and Probability

If zero lies within the confidence interval of a coefficient estimate The regressor is insignificant The...

If zero lies within the confidence interval of a coefficient estimate

The regressor is insignificant
The coefficient estimate is positive
The coefficient estimate is negative
The confidence level is not high enough

Solutions

Expert Solution

The correct option is

  • The regressor is insignificant.

The coefficient is the value associated with the independent or explainatory variable, also known as regressor. Every estimated coefficient test includes the null that the coefficient is not significantly different from zero, ie , and the alternate that the coefficient is indeed significantly different from zero, ie . If confidence interval of the estimate includes zero, then we say that we fail to reject the null hypothesis, that the coefficient is not significantly different from zero, or that it is not significant.

Besides, the coefficient estimate being positive or negative is irrelevant in that case, as the coefficient couldn't be a significant one. If the confidence interval is increased, then the interval may include zero. Also, it would be wise to say in this case that the confidence level is not low enough. Hence, all the other options are not correct.

orchestra answered 2 years ago
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