For the assignment I will examine whether or not a linear regression model is suitable for estimating the relationship between Human development index (HDI) and its components. Linear Regression is a statistical technique that correlates the change in a variable to other variable/s, the representation of the relationship is called the linear regression model.

Variables are measurements of occurrences of a recurring event taken at regular intervals or measurements of different instances of similar events that can take on different possible values. A dependent variable is a variable whose value depends on the value of other variables in a model. Hence, an independent variable is a variable whose value is not dependent on other variables in a model. The dependent variable here is HDI and this will be regressed against the independent variables which include Life expectancy at birth, Mean years of schooling, expected years of schooling and Gross National Income per capita Hence we can model this into Yi = b0 + b1 xi + b2 xi + b3 xi + b4 xi + where Y is HDI, β0 is a constant, β1 β2 β3 β4 are the coefficients and denotes for random/error term.

R2 is how much your response variable (y) is explained by your explanatory variable (x). The value of R2 ranges between 0 and 1, and the value will determine how much of the independent variable impacts on the dependent variable. The R2 value will show how reliable the regression represents the actual data in forecasting population values of Human Development. R2=1-(∑e2/∑y2) where ∑y2 is Total sum of squares (TSS) and ∑y2 is Residual sum of squares (RSS)

The closer the R2 value is to the 1 value the more reliable the regression line is as an index, and if it is equal to 1 it represents a perfect fit. For my data, I have regressed my dependent variable against all my independent variables and computed the R2 to be 0.9933 (99.33%), which shows a strong correlation between...

...Classical Linear Regression Models and Relaxing their Assumptions
Seid Nuru seidnali@yahoo.com
August 2012
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The Classical Linear Regression Models
Introduction The Simple Regression Model The Multiple Linear Regression Models Violations of the Assumptions of CLRMs
Definition
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Econometrics is the application of statistical, and mathematical techniques to the analysis of economic data with a purpose of verifying or refuting economic theories.
Theory Mathematical Model Econometric Model
As income increases, consumption also increases, but not as much as income.
yi = f ( xi ) = β0 + β1xi
y i = f ( x i ) = β0 + β1x i + εi
2
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The Classical Linear Regression Models
Introduction The Simple Regression Model The Multiple Linear Regression Models Violations of the Assumptions of CLRMs
Definition
•
Why do we need to include the stochastic (random) component, for example in the consumption function? function?
— Omission of variables leads to misspecification problem. For example, income is not the only determinants of consumption. — There may be measurement error in collecting data. — We may use poor proxy variables. — The functional form may not be correct.
3
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The Classical Linear Regression Models
Introduction The Simple Regression Model The Multiple Linear Regression Models Violations of the Assumptions of CLRMs
Some Concepts: Regression, Causation, and Correlation
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• • •...

...Applied Econometrics
Applied Econometrics Introduction
Outline FEM11090-12 Applied Econometrics
Nalan Basturk
Erasmus University Rotterdam Econometric Institute basturk@ese.eur.nl http://people.few.eur.nl/basturk/
Introduction Course Introduction Course Organization Motivation Introduction Today Regression Linear Regression Ordinary Least Squares Linear regression model Gauss-Markov conditions and the properties of OLS estimators Example: individual wages Goodness-of-ﬁt
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Lecture 1, 3 September 2013
Applied Econometrics Introduction Course Introduction
Applied Econometrics Introduction Course Introduction
About Me
Nalan Basturk
Assistant Professor Econometric Institute Room H11-12 basturk@ese.eur.nl PhD in Econometrics from Erasmus University Rotterdam, Tinbergen Institute Research area: Computational econometrics, Bayesian econometrics, Mixture models Ofﬁce Hours: to be announced on blackboard
Francine Gresnigt PhD candidate at Tinbergen Institute
Role:
gresnigt@ese.eur.nl
assignments and support (teaching material, extra lectures)
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4 / 42
Applied Econometrics Introduction Course Introduction
Applied Econometrics Introduction Course Introduction
Course Description
This course provides a guide to modern...

...Crime Rates: An Econometric Analysis using population, unemployment and growth
Table of Contents
I. Introduction
A.) Background of the Study
B.) Problem Statement
C.) Objectives
D.) Significance of the Study
E.) Scope and Limitations
II. Review of Related Literature
III. Operational Framework
A.) Variable List
B.) Model Specification
C.) A-priori Expectations
IV. Methodology
A.) Data
B.) Preliminary Tests
V. Results and Discussions
VI. Conclusion and Recommendations
VII. Bibliography
VIII. Appendices
INTRODUCTION
A. Background of the Study
Ever since the first civilizations, ever since the dawn of government and morals, crime has accompanied mankind in his everyday life. Whether it is in the streets or at home, in the office or in workplace, crime is always present. Since then, governments have exhausted billions of dollars in order to eradicate crime. Unfortunately, crime cannot be totally eradicated, unless that world or country is a utopia.
Here in the Philippines, crime is one of the most problematic dilemmas. However, in the midst of volatile economies, wars, corruption, poverty, and other more urgent problems, crime loses its significance, letting nature take its course unfazed by some if not no government intervention. It is then relegated to the bottom of the long list of problems that we experience here in the Philippines. Moreover, because it has become a part of our...

...
AN ECONOMETRIC ANALYSIS OF ENERGY CONSUMPTION AND ECONOMIC GROWTH IN TURKEY
ABSTRACT
It is commonly maintained that energy is an imporant input of industrial growth and, in this way, economical development. The scarcity of energy resources in the world make the relation between economic development and energy consumption more significant. In this study, the possible cointegration is inspected by Engle-Granger and Johansen Tests and the direction of the causality is searched by Granger causality test. The analysis showed that there is a long and short term relationship between economic growth and energy consumption in Turkey fort he period of 1980-2006.
1. INTRODUCTION
Since the Industrial Revolution, the demand for energy has followed an increasing trend, globally. Due to the unequable distrubition of available energy resources in the world and increasing demand for these resources, countries have started to search new energy methods for decades.
Energy, as a production factor, is one of the most significant inputs of industrial and economical development. Especially after the oil crisis in 1973 and its destructive impacts on economies, the relation between energy and economic growth have been begun to study. However, there is still a conflict about the direction of the causality relationship between them. There are different researches on whether rising energy consumption triggers to economic growth or economic growth causes an increase in...

...ECON 140
Section 13, November 28, 2013
ECON 140 - Section 13
1
The IV Estimator with a Single Regressor and a Single Instrument
1.1
The IV Model and Assumptions
Consider the univariate linear regression framework: Yi = β0 + β1 Xi + ui
Until now, it was assumed that E (ui |Xi ) = 0, i.e. conditional mean independence.
Let's relax this assumption and allow the covariance between Xi and ui to be dierent from zero.
Our problem here is that ui is not observed.
Doing OLS yields inconsistent estimates (remember the OVB formula).
In this case we refer to Xi as an endogenous variable.
The way to get consistent estimates is to use an instrument, which is a variable that satises the
following two properties:
1. Relevance: Cov (Zi , Xi ) = 0.
2. Exogeneity: Cov (Zi , ui ) = 0.
In words: since the variation of Xi is contaminated (it is correlated with the variation of ui ), it
follows that we need a variable that allows us to get variation in Xi that is clean, i.e. it holds ui
xed.
1.2
The Two Stage Least Squares Estimator
Since the OLS estimator doesn't yield consistent estimates, we need an estimator that uses the
instrument and yields consistent estimates.
This estimator is called Two Stage Least Squares (TSLS).
This is how it works:
1. In the rst stage, regress Xi on a constant term and Zi : Xi = π0 + π1 Zi + vi .
2. In the second stage, regress Yi on a constant term and the predicted values from the...

...Econometrics is the application of mathematics and statistical methods to economic data and described as the branch of economics that aims to give empirical content to economic relations. [1] More precisely, it is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference."[2] An influential introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships."[3] The first known use of the term "econometrics" (in cognate form) was by Paweł Ciompa in 1910. Ragnar Frisch is credited with coining the term in the sense that it is used today.[4]
Econometrics is the unification of economics, mathematics, and statistics. This unification produces more than the sum of its parts.[5] Econometrics adds empirical content to economic theory allowing theories to be tested and used for forecasting and policy evaluation
Basic econometric models: linear regression
The basic tool for econometrics is the linear regression model. In modern econometrics, other statistical tools are frequently used, but linear regression is still the most frequently used starting point for an analysis.[7] Estimating a linear regression on two variables can be visualized as fitting a line through data points representing...

...ECONOMETRIC ANALYSIS.
INDEX:
- Introduction..................................................................................3
-Background....................................................................................8
-Empirical Analysis.........................................................................9
-Conclusion.....................................................................................31
-Bibliography..................................................................................31
*
INTRODUCTION:
For many years it has tried to explain and predict economic phenomena. In the present work we destructive her to perform an econometric study of the function of the number of travelers who occupy tourist accommodation in Andalusia. The data required for such analysis have been collected from the database of the Institute of statistics and cartography of Andalusia, for easy access through the official website (http://www.juntadeandalucia.es/institutodeestadisticaycartografia/index.html).
The National Statistical Institute(NSI) sends every month to the Institute of statistics of Andalusia provisional results which offers survey during the previous month in the eight Andalusian provinces. The survey is exhaustive in all provinces, except in some categories where sampling procedures are performed.
The estimates are published disaggregated by categories up to the level that allows the maintenance of...

...of Divorce and Unwed Childbearing: First-Ever Estimates for the Nation and all fifty States’, Institute of American Values, New York , < http://www.marriagedebate.com/pdf/ec_div.pdf >, accessed 10th May 2011
Thompson, A.P, 1983, ‘Extramarital sex: A review of the literature,’ Journal of Sex Research, Volume 19 pp. 1-22.
Weiderman, M.W, and Allegeier, E.R, 1996, ‘Expectations and attributions regarding extramarital sex among married individuals,’ Journal of Psychology and Human Sexuality, Volume 8, pp 21-35.
Whisman, M.A, Dixon, A.E, and Johnson, B, 1997, ‘Therapists’ perspectives of couple problems and treatment issues in couple therapy, Journal of Family Psychology, Volume 11, pp. 361-66
Wooldridge, J.M ( 2009) ‘Introductory Econometrics- A modern Approach’, 4th Edition, Southern-Western, USA
Appendix
Figure 1: Medium Income of Families with Children by Struct. in USA 1994 (Fagan 2001)
Figure 2: Families with Children by Income Quintile 1996 (Fagan 2001)
Figure 3: Full list of original data variables and what they mean.
A description of the data used in our models includes:
Number of observations = 601
Id = Unique number for a person - Used to identify a person in the sample
Male = 1 if male, 0 if female
Age = Age in years
Yrsmarr = Is the number of years a person has been married.
Kids = 1 if the person has kids, 0 if the person does not have any kids.
Relig = Religious affiliation.
5 = Very...