JINGLE BELLS, JINGLE BELLS...

An overview of every single (Bell-shaped!) normal distribution in ECON1203

By Blair Wang BIT12
rv~N(mean, var) Generic Normal Distribution
Every normal distribution can be uniquely identified by its mean and variance.

x~N(, 2)

Normally Distributed Population

Mean =
2
Variance =
x is a "Normal RV"

Z~N(0,1)

Standard Normal Distribution

Mean = 0
Variance = 1
Z is the "Standard Normal RV"

X~N(np, npq)

Normal Approximation to the Binomial

Mean = E(x) = np
Variance = Var(X) = npq
Remember to apply Continuity Correction Factor!

x ~N(, 2/n)

Sampling Distribution of Sample Mean (SDOM)

Mean =
2
Variance = /n
2
In order to assert that x ~N(, /n), you must invoke CLT (n>30) or have X~N(,
2
). Otherwise, you must use Student's t distribution.

p ~N(p, pq/n)

Sampling Distribution of Sample Proportion

Mean = p
Variance = pq/n
Based on the Normal Approximation to the Binomial; since X~N(np,npq), we define
p =X/n so that p ~N(p, pq/n).

~N(0, 2)

Classical Linear Regression A7: Normal Disturbances

Mean = 0
2
Variance =

... because of A4: Zero Conditional Mean

... because of A5: Homoskedasticity

Yi~N(i, 2)

Actual Y-Value vs. Forecasted Y-Value

bj~N(j, var(j))

Sample Coefficient vs. Population (True) Coefficient

~N(, var())

Sample Forecast vs. Population (True) Forecast

Mean =
... i.e., the forecast
2
Variance =
Based on A7, since Yi = i + .
2
2
is estimated by SEE = SSE/(n-2). SEE as "Standard Error" in Excel.

Mean = j
Variance = Var(j)

... i.e., the true coefficient

... provided in the ANOVA output as "Standard Error"

Mean =
... i.e., the forecast based on the sample coefficients
Variance = var()
... implicitly in "Useful Formulae", "Forecast Intervals for E(Yp|Xp)"
Based on Sample Coefficient vs. Population (True) Coefficient, since the coefficients
determine what the forecasted Y-value for a particular X-value will be.
This is the distribution that forms the basis of the "confidence interval used to predict
the mean value of y", i.e., to predict where the regression line will be as opposed to
where the actual value (that the regression line is chasing after) will be.