Suppose that the following import function for Turkey is estimated for Turkey between 1980-2
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Suppose that the following import
In order to measure the impact of 2001 crisis the regression is estimated based on the whole and two subsamples and the following RSS are obtained.
Time period: 1980-2000 , RSS1= 69
Time period: 2001-2015, RSS2 =35
Time period: 1980-2015 , RSS = 160
Carry out the Chow test whether the regressions for the two periods are different at 5% significance level.
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