Regression Analysis
Regression Analysis
- A statistical method to examine the relationship between a dependent variable (outcome) and one or more independent variables (predictors).
- Used for prediction and hypothesis testing.
Linear Regression Model and their Properties
Properties
- Linear regression is the starting point of econometric analysis.
- The linear regression model has a dependent variable that is a continuous variable, while the independent variables can take any form (continuous, discrete, or indicator variables).
- A simple linear regression model has only one independent variable, while a multiple linear regression model has two or more independent variables.
- The linear regression is typically estimated using OLS (ordinary least squares). Examples include studying the effect of education on income; or the effect of recession on stock returns.