Regression Analysis - Interest Rate in Australia

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35353 Regression Analysis Mini Conference Report Interest Rate Movement in Australia Analysts: Conrad Gutierrez – 10169050 Contents page: Introduction 3 Methodology 4 Multiple Linear Regression 4 * Model Assumptions 4 Full Model 5 New Full Model 7 Finding the Best Model * Method 1: Stepwise Regression 9 * Method 2: Forward Selection 11 * Method 3: Backward Elimination 12 * Method 4: Best Subset Selection 14 Analysis of the best model 15 * Model 1 15 * Model 2 21 Model Comparison 25 Conclusion 26 Comment 27 Introduction…show more content…
Different techniques of model selection were then utilised to determine the most parsimonious model that explains our response variable. This included Forward Elimination, Backward Elimination, Step-wise Regression and Best Subset Method to name a few. Throughout the model selection process we observed the effects of outliers and influential points on our data, using the Standardised Residuals, Leverage, Cook’s D Distance and DFITS. A closer examination of these factors led to making necessary adjustments to achieve our final reduced model. When we run the regression, Minitab outputs the full model as Full Model The regression equation is 90 day BAB = 1.46 + 0.049 Housing Debt:Asset ratio - 0.046 Party - 0.0799 Inflation Rate - 0.584 Unemployment Rate - 0.000298 S&P ASX 200 + 0.218 Credit card rate - 0.34 AUS/USD exchange rate + 0.309 10 yr Gov bond yields + 0.652 Variable mortgage rate - 0.000026 ATM Withdrawal transactions Predictor Coef SE Coef T P VIF Constant 1.455 2.762 0.53 0.601 Housing Debt:Asset ratio 0.0488 0.1160 0.42 0.676 60.8 Party -0.0457 0.2646 -0.17 0.864 5.7 Inflation Rate -0.07990 0.07072 -1.13 0.265 6.5 Unemployment Rate
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