# dw - British Spirits Example Simple Linear Regression Over...

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British Spirits Example Simple Linear Regression Over Time Response Variable (Y) – Per capita consumption of Spirits Predictor Variable (X) – Indexed Price-to-income ratio Time Period – Annual Data 1870-1938 Source: J. Durbin and G.S. Watson, “Testing for Serial Correlation in Least Squares Regression. II.” Biometrika . 38 : (June 1951) pp.159-177. Model: ε β + + = X Y 1 0 Step 1: Plot the consumption versus the indexed price-to-income ratio. Step 2: Fit a simple linear regression model: Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 5.16 0.258 20.01 .0000 4.64 5.67 price_inc -3.14 0.238 -13.17 .0000 -3.62 -2.66 Consumption vs Price/Income 1 1.2 1.4 1.6 1.8 2 2.2 0.75 0.8 0.85 0.9 0.95 1 1.05 1.1 1.15 1.2 1.25 Price-to-Income Ratio Consumption consume

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Thus, the fitted equation is: X Y 14 . 3 16 . 5 ^ - = Step 3: Obtain a histogram of the residuals (I copied residuals to original spreadsheet) The first bin (0 cases) represents the number less than –0.25, the second bin (9 cases)
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## This note was uploaded on 07/28/2011 for the course STA 6208 taught by Professor Park during the Fall '08 term at University of Florida.

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dw - British Spirits Example Simple Linear Regression Over...

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