Question

Why is the standard normal distribution so important for econometrics?

Answer 1

Normal distribution with standard deviation 1 and man zero is referred to standard normal deviation. Thee degree at which the standard normal deviation deviates from mean center zero is standard deviation. A group or collection of continuous probability distributions depicted by normal equation is called normal distribution.

In econometrics thee only significant probability distribution fortuitous variable is considers residuals to follow normal distribution. The theorem of central limit explains known as normal distribution. It fits different natural phenomena and become regression takes and that as sample sees important. The value distribution is demonstrated through probability function in normal distribution. Both non linear and linear resize rises normal distribution is followed by sampling distribution of mean , though underlying distribution of real variable is not as normal one. Hypothetical tests in statistics consider data follow normal distribution. These are the points make standard normal distribution important in econometrics.