statistics regression project 1

Please read all attachments to full fill the project. When entering the data from the website provide in EXCEL please allow me to alter anything just don’t type numbers in. You will have to look on the FRED to find the data needed. We will need to be in constant contact to make sure that each part is correct. Once, I get my grade back i will tip depending on the grade.

Below is our topic:

to look at some components of aggregate demand like consumption and investment. The data should be readily available in FRED and the “Theory” background should be evident at least from the chapters on aggregate demand and aggregate supply.

Probably at the end of the day is you will run a regression where the LHS is either consumption or investment. I will put the consumption in the example below.

CONS = B0 + B1*(GDP or change in GDP) + B2*(Interestrate) + b3*(Otherthings)

you might think of “other things” there may be more than 1. One issue you will have is that all of the data is highly correlated and that prevents easy and quick estimation with a regression framework. You won’t know until you line it up and do it though. IF that is the case you probably could go with changes in each of the above, not levels in the above.

I would suggest that one thing to do for completeness is to estimate the base model above, without “otherthings” then check the residuals from the regression. Once the regression is determined. Probably the residuals show a pattern, I would guess they are quite dirreent through the last business cycle trough. We could figure out some of that “repair” to complete the project.