Multiple Regression

The General Model

It is unlikely that a model with one independent variable would be able to explain economic phenomena. The extension from simple regression with one independent variable to multiple regression with several independent variables is easy. The additional exogenous variables are included in the model linearly. This means that the independent variables, multiplied by their respective coefficients, are included in additive form in the model.


The subscript K indicates that there are K-many independent variables. The three dots represent repetition of the same pattern for all the independent variables ...

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