Goodness of Fit So far, we have no way of measuring how well the explanatory or independent variable, X, explains the dependent variable, Y. In other words, we must know how well the OLS regression line fits the data. Are the observations tightly clustered around the regression line, or are
Simple Linear Regression Model Simple Linear Regression Model is used to estimate the relationship between one dependent and one independent variable. It is also called bivariate or two variable regression model. For example, regression of consumption on disposable income, regression of sales revenue on advertisement expenses, regression of log of
In the previous post we explained the concept of regression analysis in detail along with its meaning, uses and objectives. Moreover, we also discussed how regression analysis differs from correlation analysis and causation. Further, we differentiate conditional and unconditional mean. To read previous article click Nature of Regression Analysis. In
In the previous lecture we discuss the types and nature of economic data used in any empirical economic analysis. To read click on Types of Economic Data. We also discuss the sources of obtaining economic data. In this post will discuss about the nature of regression analysis, its objectives, uses in
Types of Economic Data Data is central to any empirical analysis. An empirical analysis uses data to test a hypothesis or theory or to estimate a relationship. The first step in any empirical analysis is to formulate a research question. Model specification is the next step followed by obtaining data.
Introduction Welcome to the fascinating world of econometrics! Studying econometrics bridges the gap between being a student of economics and becoming a practicing economist. It equips you with essential tools for analyzing economic data, empirically testing economic theories, providing numerical estimates of economic relationships, and forecasting future events. In this