Chapter 5

Going Beyond Ordinary with the Ordinary Least Squares Technique

In This Chapter

arrow Getting acquainted with the least squares principle

arrow Pinpointing the residuals

arrow Estimating regression coefficients

arrow Interpreting the magnitude of regression coefficients

arrow Measuring the overall regression fit

Regression analysis refers to techniques that allow you to estimate economic relationships using data. The method used most frequently is commonly known as ordinary least squares (OLS). In this chapter, you discover how to estimate simple regression models with manual calculations and computer calculations. You also find out how to interpret simple and multiple regression models using output from STATA.

warning_bomb.eps Although the OLS technique is popular and relatively simple (in comparison to other available methods), the application of it through manual calculations can become quite complicated when you ...

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