1.3 THE METHODOLOGY OF ECONOMETRICS o Procedures of econometrics analysis 5. Estimating the parameters of the chosen Econometric model using the method of ordinary least squares (ols) to estimate the parameters of the model + The estimated regression line gives the relationship between average y and x, that is, on average how responds to a unit change in X. We use"on the average "because the error term u is likely to make relationship somewhat imprecise1.3 THE METHODOLOGY OF ECONOMETRICS Procedures of econometrics analysis 5. Estimating the Parameters of the Chosen Econometric Model using the method of ordinary least squares (OLS) to estimate the parameters of the model. The estimated regression line gives the relationship between average Y and X, that is, on average how Y responds to a unit change in X. We use “on the average” because the error term u is likely to make relationship somewhat imprecise. Yi b1 b2 Xi ˆ = +