Regression101 - Linear Regression(ver 6.0 Oscar...

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PU/DSS/OTR Linear Regression (ver. 6.0) Oscar Torres-Reyna Data Consultant [email protected]
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PU/DSS/OTR Regression: a practical approach (overview) We use regression to estimate the unknown effect of changing one variable over another (Stock and Watson, 2003, ch. 4) When running a regression we are making two assumptions, 1) there is a linear relationship between two variables (i.e. X and Y ) and 2) this relationship is additive (i.e. Y= x1 + x2 + …+xN ). Technically, linear regression estimates how much Y changes when X changes one unit. In Stata use the command regress, type: regress [dependent variable] [independent variable(s)] regress y x In a multivariate setting we type: regress y x1 x2 x3 … Before running a regression it is recommended to have a clear idea of what you are trying to estimate (i.e. which are your outcome and predictor variables). A regression makes sense only if there is a sound theory behind it. 2
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