Question

1. Estimate regression model fort he independent and dependent variables below

1. Write the observations to the table (20 POINTS) (I wrote two of them to give you a clue)

	View (X)	Citiation (Y)
Income Inequality	420	75
Real Exchange Rate	416	30
3.Ownership Identity	764	3
4.Trade Flows	49	3
5.Oil price	417	2
6.Modelling Volatility	310	4
7.Foreign Direct Investment	46	5
8.An empirical test	27	3
9.Changes in capital	23	18
10.Growth	349	18

Please estimate the regression model (Yi=α0+α1Xi+εi ) for the variables by using normal equations and showing all calculation steps clearly in the Ms World file. (30p). You have to use the same steps which we used in the lecture. You can find the steps from lecture slides or recorded video in UBIS. SEND IT IN MS WORD FORMAT NOT SCREENSHOT

Answer 1

The regression equation is:

y = 11.25 + 0.02*a1 +εi

X	Y	(x - xbar)	(y - ybar)	(x - xbar)*(y - ybar)	(x - xbar)²	(y - ybar)²
420	75	132.5	58.9	7804.25	17556.25	3469.21
416	30	128.5	13.9	1786.15	16512.25	193.21
764	3	476.5	-13.1	-6242.15	227052.3	171.61
49	3	-238.5	-13.1	3124.35	56882.25	171.61
471	2	183.5	-14.1	-2587.35	33672.25	198.81
310	4	22.5	-12.1	-272.25	506.25	146.41
46	5	-241.5	-11.1	2680.65	58322.25	123.21
27	3	-260.5	-13.1	3412.55	67860.25	171.61
23	18	-264.5	1.9	-502.55	69960.25	3.61
349	18	61.5	1.9	116.85	3782.25	3.61
xbar	ybar	Σ(x - xbar)	Σ(y - ybar)	Σ(x - xbar)*(y - ybar)	Σ(x - xbar)²	Σ(y - ybar)²
287.5	16.1	0	-1.4E-14	9320.5	552106.5	4652.9
a1 = Σ(x - xbar)*(y - ybar)/Σ(x - xbar)²	0.02
ao = ybar - a1*xbar	11.25