The method of estimating econometric models which involves fitting a line to the data by minimising the sum of squared residuals is the
A) Method of ordinary least squares
B) Method of moments
C) Method of generalised squared moments
D) Method of maximum likelihood

Question

Quizplus · Accepted Answer

The method of ordinary least squares (OLS) involves estimating the parameters of a linear regression model by minimizing the sum of the squares of the differences between the observed dependent variable values and those predicted by the linear function. This is a fundamental technique in econometric analysis for estimating the unknown parameters in a linear regression model.

The Method of Estimating Econometric Models Which Involves Fitting a Line