CHAPTER 2

More Sophisticated Regression Analysis and Inference

So far we have covered very basic regression analysis of a linear function and drawn inference from the results. Now we carry regression analysis into the realm of quadratic modeling, omitted variable bias, and within transformations using actual data from the World Bank’s World Development Indicators Database. But first, we will have to discuss some basic database constructs and equation formatting.

Types of Data and Equation Formatting

There are three basic types of data used in economic research—time series data, cross-sectional data, and panel data. A basic time series model with one left-hand-side variable and one right-hand-side variable can be written as

The reader will notice ...

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