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What steps should be taken (mention all of them) in order to successfully specify/estimate a regression equation? (please answer to this question, not to the one on the picture)

What steps should be taken (mention all of them) in order to successfully specify/estimate a regression equation? (please answer to this question, not to the one on the picture)

Algebra: Structure And Method, Book 1
Algebra: Structure And Method, Book 1
(REV)00th Edition
ISBN:9780395977224
Author:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. Cole
Publisher:Richard G. Brown, Mary P. Dolciani, Robert H. Sorgenfrey, William L. Cole
Chapter2: Working With Real Numbers
Section2.3: Rules For Addition
Problem 7P
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What steps should be taken (mention all of them) in order to successfully specify/estimate a regression equation? (please answer to this question, not to the one on the picture) 

Below 4 equations for calculation of wages in Latvia (ALGA, EUR) are given, depending on productivity (PRODUKTIVITATE, thsd EUR), price level (CENA), unemployment rate (BEZDARBS, %) and ratio of GDP of Latvia and the EU (IKP_ATTIECIBA). Which equation would you use, why (for justification use all the indicators known from the lectures)? (t-stat = 2,14; t- F-stat 0,05;3;13 stat 0,05;15 = 2,13; t-stat0,05;16 = 2,12; = 3,29; F-stat 0,05;2;13 = 3,63; F-stat 0,05;2;14 = 3,59)
Transcribed Image Text:Below 4 equations for calculation of wages in Latvia (ALGA, EUR) are given, depending on productivity (PRODUKTIVITATE, thsd EUR), price level (CENA), unemployment rate (BEZDARBS, %) and ratio of GDP of Latvia and the EU (IKP_ATTIECIBA). Which equation would you use, why (for justification use all the indicators known from the lectures)? (t-stat = 2,14; t- F-stat 0,05;3;13 stat 0,05;15 = 2,13; t-stat0,05;16 = 2,12; = 3,29; F-stat 0,05;2;13 = 3,63; F-stat 0,05;2;14 = 3,59)
Dependent Vanable: LOG(ALGA) Method: Least Squares Included observations: 17 after adjustments Vanable LOG(CENA) LOG PRODUKTIVITATE) BEZDARBS C R-squared Adjusted R-squared S.E. of regression Sum squared resid Log Ikelihood Durbin-Watson stat Variable LOG(CENA) LOG(IKP_ATTIECIBA) C Dependent Variable: LOG(ALGA) Method: Least Squares Included observations: 18 after adjustments R-squared Adjusted R-squared Coefficient S.E. of regression Sum squared resid Log likelihood Durbin-Watson stat 1.733446 0.316520 -0.011502 7.202105 Coefficient Std. Error 1.588128 0.718542 7.940545 0.143014 0.181278 0.003949 0.314418 0.995794 Mean dependent var 0.994823 S.D. dependentvar 0.040174 Akake into criterion 0.020981 Schwarz ofterion 32.80553 F-statistic 1.840821 Prob (F-statistic) Std. Emor t-Statistic 0.073034 0.119047 0.087802 12.12084 1.746049 -2.912980 22.90614 +-Statistic 21.71778 6.035777 117.4806 0.994508 Mean dependent var 0.993778 S.D. dependent var 0.048459 Akaike info criterion 0.032377 Schwarz criterion 31.34517 F-statistic 1.985028 Prob(F-statistic) Prob. 0.0121 0.0000 Dependent Varable: LOG (ALGA) Method: Least Squares Included observations: 17 after adjustments 0.0000 LOG (CENA) 0.1044 LOG (IKP_ATTIECIBA) Prob. Variable 7.959451 R-squared 0.558335 Adjusted R-squared -3.388885 S.E. of regression -3.192835 Sum squared resid 1025.827 Log Ikelihood 0.000000 Durbin-Watson stat 0.0000 0.0000 0.0000 BEZDARBS C Variable LOG(CENA) BEZDARBS C Coefficient 7.904990 R-squared 0.588888 Adjusted R-squared -3.149484 S.E. of regression -3.001068 Sum squared resid 1358.142 Log likelihood 0.000000 Durbin-Watson stat 1.682538 0.613199 -0.003104 7.906579 Dependent Variable: LOG(ALGA) Method: Least Squares Included observations: 17 after adjustments Std. Error Coefficient 0.122338 0.246822 1.974777 -0.016842 7.747829 0.005984 0.071659 Mean dependent var 0.996479 0.995666 S.D. dependent var 0.036756 Akalike into criteron 0.017563 Schwarz criterion 34.31709 F-statistic 1.765948 Prob(F-statistic) Std. Emor t-Statistic 0.039330 0.002674 0.037787 13.75320 2.484378 -0.518692 110.3366 t-Statistic Mean dependent var 0.994807 0.994065 S.D. dependent var 0.043013 Akaike info criterion 0.025901 Schwarz criterion 31.01477 F-statistic 1.929371 Prob(F-statistic) Prob 7.959451 0.558335 -3.566716 -3.370666 5021103 -8.297883 205.1410 0.0000 0.0274 0.6127 0.0000 1226.321 0.000000 Prob. 0.0000 0.0000 0.0000 7.959451 0.558335 -3.295855 -3.148817 1340.984 0.000000
Transcribed Image Text:Dependent Vanable: LOG(ALGA) Method: Least Squares Included observations: 17 after adjustments Vanable LOG(CENA) LOG PRODUKTIVITATE) BEZDARBS C R-squared Adjusted R-squared S.E. of regression Sum squared resid Log Ikelihood Durbin-Watson stat Variable LOG(CENA) LOG(IKP_ATTIECIBA) C Dependent Variable: LOG(ALGA) Method: Least Squares Included observations: 18 after adjustments R-squared Adjusted R-squared Coefficient S.E. of regression Sum squared resid Log likelihood Durbin-Watson stat 1.733446 0.316520 -0.011502 7.202105 Coefficient Std. Error 1.588128 0.718542 7.940545 0.143014 0.181278 0.003949 0.314418 0.995794 Mean dependent var 0.994823 S.D. dependentvar 0.040174 Akake into criterion 0.020981 Schwarz ofterion 32.80553 F-statistic 1.840821 Prob (F-statistic) Std. Emor t-Statistic 0.073034 0.119047 0.087802 12.12084 1.746049 -2.912980 22.90614 +-Statistic 21.71778 6.035777 117.4806 0.994508 Mean dependent var 0.993778 S.D. dependent var 0.048459 Akaike info criterion 0.032377 Schwarz criterion 31.34517 F-statistic 1.985028 Prob(F-statistic) Prob. 0.0121 0.0000 Dependent Varable: LOG (ALGA) Method: Least Squares Included observations: 17 after adjustments 0.0000 LOG (CENA) 0.1044 LOG (IKP_ATTIECIBA) Prob. Variable 7.959451 R-squared 0.558335 Adjusted R-squared -3.388885 S.E. of regression -3.192835 Sum squared resid 1025.827 Log Ikelihood 0.000000 Durbin-Watson stat 0.0000 0.0000 0.0000 BEZDARBS C Variable LOG(CENA) BEZDARBS C Coefficient 7.904990 R-squared 0.588888 Adjusted R-squared -3.149484 S.E. of regression -3.001068 Sum squared resid 1358.142 Log likelihood 0.000000 Durbin-Watson stat 1.682538 0.613199 -0.003104 7.906579 Dependent Variable: LOG(ALGA) Method: Least Squares Included observations: 17 after adjustments Std. Error Coefficient 0.122338 0.246822 1.974777 -0.016842 7.747829 0.005984 0.071659 Mean dependent var 0.996479 0.995666 S.D. dependent var 0.036756 Akalike into criteron 0.017563 Schwarz criterion 34.31709 F-statistic 1.765948 Prob(F-statistic) Std. Emor t-Statistic 0.039330 0.002674 0.037787 13.75320 2.484378 -0.518692 110.3366 t-Statistic Mean dependent var 0.994807 0.994065 S.D. dependent var 0.043013 Akaike info criterion 0.025901 Schwarz criterion 31.01477 F-statistic 1.929371 Prob(F-statistic) Prob 7.959451 0.558335 -3.566716 -3.370666 5021103 -8.297883 205.1410 0.0000 0.0274 0.6127 0.0000 1226.321 0.000000 Prob. 0.0000 0.0000 0.0000 7.959451 0.558335 -3.295855 -3.148817 1340.984 0.000000
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