1_ Regression_Overview - Research Methods in Economics ECO...

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Research Methods in Economics . ECO 4451 Student Lecture Notes 1 Research Methods in Economics ECO 4451 Research Methods in Economics Regression Overview 3 Topics Basic concepts Use OLS when dependent variable is continuous Two-variable regression model Multiple regression model Binary variables Nonlinear relationship 4 Scatter Plots and Correlation A scatter plot (or scatter diagram) is used to show the relationship between two variables Correlation analysis is used to measure strength of the association (linear relationship) between two variables Only concerned with strength of the relationship No causal effect is implied 5 Scatter Plot Examples y x y x y y x x Linear relationships Nonlinear relationships 6 Scatter Plot Examples y x y x y y x x Strong relationships Weak relationships (continued)
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Research Methods in Economics . ECO 4451 Student Lecture Notes 2 7 Scatter Plot Examples y x y x No relationship (continued) 8 Introduction to Regression Analysis Regression analysis is used to: Predict the value of a dependent variable based on the value of at least one independent variable Explain the impact of changes in an independent variable on the dependent variable Dependent variable: the variable we wish to explain Independent variable: the variable used to explain the dependent variable regressor, covariate, predictor 9 Simple Linear Regression Model Only one
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This note was uploaded on 09/09/2011 for the course ECON 4451 taught by Professor Richardhofler during the Fall '11 term at University of Central Florida.

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1_ Regression_Overview - Research Methods in Economics ECO...

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