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November 08, 2005
Hypothesis Testing
The null hypothesis is what we are left with if the evidence is not strong enough to reject it in favor of the alternative hypothesis. We can make two kinds of errors.
A binomial example illustrates the concepts.
A similar Type I / Type II analysis can be conducted for a normal distribution.
Almost all empirical work in economics uses two-tailed alternative hypotheses.
Our ultimate goal is testing hypotheses about regression parameters.
Posted by bparke at November 8, 2005 11:02 PM