Simple Linear Regression Using Matrix: Full Numerical Example Introduction: Why Use Matrix Algebra for Regression? When we estimate a Simple Linear Regression Model (SLRM) using
Dummy Variable Regression Model: A Complete Guide with Solved Examples In basic regression analysis, we typically work with variables that are numerical or quantitative in
Matrix Approach to Linear Regression Model & Derivation of OLS Estimator in Matrix Form The K-Variable Linear Regression Model Consider the following K-variable linear regression
Autocorrelation in Econometrics Causes, Consequences, Detection, and Remedies Much of applied macroeconomic research, from modelling GDP growth to forecasting inflation or exchange rate movements, relies
Heteroscedasticity in Econometrics: Meaning, Causes, Tests, and Remedies Explained One of the core assumptions of the Classical Linear Regression Model (CLRM) is that the error
Methodology of Econometrics: 8 Steps Explained with an Example Every empirical study in economics, whether it involves estimating inflation dynamics or testing the consumption behaviour
Permanent Income Hypothesis Explained: Friedman’s Theory of Consumption Introduction Imagine two friends. One gets a surprise USD 5,000 bonus at work. The other gets a
Functional Forms of Regression Models The Semi-Log Model in Econometrics In the previous article, we examined the Double-Log Model, where both the dependent and independent
Various Functional Forms of Regression Models Double-Log Model Explained with Examples Introduction Regression analysis is one of the most powerful tools in econometrics, but a
Relative Income Hypothesis How Social Comparison Shapes Consumption Why do two families earning the exact same income spend such different amounts on consumption? Why does
Saving Function Definition The saving function shows the functional relationship between saving and disposable income. It tells us how much a household wants to save
Consumption Function Definition The consumption function shows the functional relationship between consumption expenditure (C) and disposable income levels (Y). It tells us how much households
In macroeconomic analysis, consumption is one of the most important components of aggregate demand and plays a fundamental role. Economists have developed a number of
What is Portfolio? Portfolio is a collection of financial assets owned by an individual or institution, such as stocks, bonds, cash, mutual funds, real estate,
What is Sensitivity Analysis? Sensitivity analysis is a financial modelling technique used to determine how key input variables affect the outcome of a model or
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