The regression specified for private investment is I= a1 + a2 Y + a3 CRD+ u. The results from estimating the regression are presented below. The sample covers the annual series spanning from 1981-2020 (n=40). It =2.4 + 0.75Yt + 0.45CRDt
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.
The regression specified for private investment is I= a1 + a2 Y + a3 CRD+ u. The results from estimating the regression are presented below. The sample covers the annual series spanning from 1981-2020 (n=40). It =2.4 + 0.75Yt + 0.45CRDt (1.02) (0.26) (0.12)
R2 = 0.78 , D-W-d= 1.95 where I, Y and represent real private investment, real GDP and real credits respectively. Suppose you would like to perform the test for the first order autocorrelation using the LM type test technique. Define the auxiliary regression. Also suppose you found R-squared from the auxiliary regression to be 0.082, perform the LM test for the first order autocorrelation and interpret the result.
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