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...