Econometrics, Multicollinearity

Imperfect multicollinearity With imperfect multicollinearity, an independent variable has a strong but not perfect linear function of one or more independent variables. This also means that there are also variables in the model that effects the independent variable....
Dummy variable, Econometrics

To understand regression analysis with dummy variables, let us take an example of using dummy variable with structural changes in an economy. For example, there was a structural change in U.S during 1981-1982, and also a severe recession in 2007 and 2008. So when we...
Dummy variable, Econometrics

By Definition, Dummy variables are Indicator, Categorical and Qualitative variables that are used to quantify the qualitative, nominal scale variables by giving them the value of 0 and 1. In simple words, we come across variable which are non-numerical in their...
Econometrics, Regression Analysis

In Econometrics, we use the tool of Regression Analysis to understand the economic relationships through quantitative estimation. This quantitative estimation is done by Regression which is one of the most frequent and important tool used to understand economic...
Index Numbers, Statistics

Introduction Often we want to know how certain variables like prices, production, etc. have changed over time and space. For example, we may like to compare the change in the average retail price of milk in 1985 with that in 1982 or we may like to compare the retail...
Macroeconomics, Multiplier Effect

It’s an effect in economics that shows how much or by how many times final incomes increases if some extra initial injection of investment/spending is done, known as multiplier effect. How it occurs? Holding a thought on the occurrence of multiplier process and...
Gross Domestic Product (GDP)

What does GDP Per capita mean? GDP and GDP per capita are interlinked, putting a glance on its history how Per capita came from the concept of GDP. The great invention of 20th century GDP that stands for Gross Domestic Product. Taking Gross here a number of total,...
Gross Domestic Product (GDP), Macroeconomics, Misc

GDP is considered to be the most simplest and common economic statistics that measures the economic activity of the economy that takes place within a year – that leads to the analysis and conditions of various factors such as investments, household consumption ,...
Aggregate Demand and Supply, Macroeconomics

The Aggregate Supply curve shows the relationship between the Aggregate Quantity Supplied by all the businesses and firms of an economy and the over price level. The Sum of individual supply curve is not the Aggregate Supply curve. Why ? So know more details about the...