Hypothesis Testing
Learn about hypothesis testing and confidence intervals.
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One method of statistical inferences is to test a hypothesis regarding a hypothetical population parameter value of $\beta_1$.

Null hypothesis $H_0$ :$\beta_1 = 0$. Trade openness has no effect on economic growth in the population.

Alternative hypothesis $H_a$ : $\beta_1 \neq 0$. Trade openness has an effect on economic growth in the population.
ttest statistic
To test the null hypothesis directly, we have to construct a test statistic, denoted as t.
$t = \frac{b\beta_1}{se(b)}$
This ttest statistic is similar in spirit to the ttest statistic on a hypothetical population mean introduced in
model1
as an example.
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