【Econometrics】Derivatives

Derivatives

From today, we will delve into mathematics and statistics used for econometric analyses. First, we begin with a review of derivatives.

 

Motivation

Regression line, which represents the relationship between A and B, we need derivatives. Roughly, the idea is to find the line that best fits the actual observations and the predictions generated by your statistical model set-up. 

 

Definition of Derivative

Derivative is a measure of how a function changes as its input changes.

 

Notation

 

 

Derivatives of Elementary Functions

 

Rules for Finding Derivative

$f$ and $g$ are functions, and $a$ and $b$ are constants:

 

 

Higher Derivatives

 

 

Partial Derivatives