In This Chapter
Understanding the statistical assumptions on which regression analysis is based
Exploring how to implement simple and multiple regression models
Grasping how to test and interpret regression results
Regression analysis is a statistical framework that is used to estimate the strength and direction of the relationship between two or more variables. Simple regression analysis is used to estimate the relationship between a dependent variable (Y) and an independent variable (X). Multiple regression analysis is used to estimate the relationship between a dependent variable and two or more independent variables. We typically think of the independent variable as something you are trying to predict and the dependent variables as quantities you can measure. Regression analysis is heavily used in economics and finance to understand relationships between variables such as interest rates, GDP growth rates, stock prices, corporate profits, and more.
This chapter covers the methodology that is used to implement and interpret the results of regression analysis. It explains the statistical assumptions underlying regression analysis in detail, and includes ...