x’ forecast only on HP-32E

[rawi]

Hi Nigel,

in your equation, if Epsilon has a normal distribution with mean zero and standard deviation s your x has as well a normal distribution with mean zero and standard deviation s/b. The point is that x is not a random variable and does not have a distribution. That is why we minimize in regression analysis the sum of squares in the direction of the y axis. If x and y both have a distributuion you need another model and you will get a different beta. You can read about this here: https://en.wikipedia.org/wiki/Errors-in-...les_models