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Regression of Usa GDP On Inflation, Unemployment and Net Export

This document describes a multiple linear regression model that analyzes the relationship between US GDP and several economic indicators: inflation, unemployment rate, and net export. It finds that GDP is negatively correlated with inflation and net export, but is not significantly correlated with unemployment rate. The model explains around 81% of the variation in GDP based on these three independent variables. Hypothesis tests are also reported for each variable's individual contribution to the model.

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Ismayil Əsədov
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37 views13 pages

Regression of Usa GDP On Inflation, Unemployment and Net Export

This document describes a multiple linear regression model that analyzes the relationship between US GDP and several economic indicators: inflation, unemployment rate, and net export. It finds that GDP is negatively correlated with inflation and net export, but is not significantly correlated with unemployment rate. The model explains around 81% of the variation in GDP based on these three independent variables. Hypothesis tests are also reported for each variable's individual contribution to the model.

Uploaded by

Ismayil Əsədov
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Regression of USa

GDP on inflation,
unemployment and
net export

Ramin Heyder Kamran Ferman


Mammadali Mahmud
MLR model

Multiple linear regression (MLR), also known simply as


multiple regression, is a statistical technique that uses
several explanatory variables to predict the outcome of a
response variable. The goal of multiple linear regression
(MLR) is to model the linear relationship between the
explanatory (independent) variables and response
(dependent) variable

y = B_1 * x_1 + B_2 * x_2 + … + B_n * x_n +


A
About Our MRL model

we have taken four economic variables from the USA economy and in
this report, we will analyze whether there is a significant relationship
between USA GDP and inflation, unemployment rate, next export. In this
regression, 4 variables have been included (1 dependent and 3
independent)
• Dependent variable- US GDP in billion US dollars – GDP in eviews
• Independent variables:
 ‘’Inflation’’, expressed as a percentage growth rate in consumer price
index(CPI) – inflation in eviews
 ‘’Unemployment rate’’, expressed as a percentage of the total labor
force unemployed – unemp_rate in eviews
 ‘’Net export’’, expressed as a difference between export and import in
billion US dollars
Our equation for the regression
model

•  

Variables
Coefficient Std. Error t-Statistic Prob.
26.30963 241.1400 0.109105 0.9138
Unemp_rate
-15.13166 1.708320 -8.857626 0.0000
Net_exp
-541.5884 170.7181 -3.172413 0.0032
Inflation
6880.478 1871.289 3.676865 0.0008
C
0.808842 F-statistic 47.95453
R-squared
The Cofficients of our model

••
 
(26.31) indicates that if the unemployment rate increases by 1
percentage (here this percentage is a measurement unit), the GDP will
decrease about 26.31% on average, while holding the other factors
fixed
• (-15.13) indicates that if net export increases by 1 billion US dollars,
the GDP will decrease about 15.13 on average, while holding the
other factors fixed.
• (-541.59) indicates that if inflation increases by 1 percentage point the
GDP will decrease by about 541.59 on average while holding the
other factors fixed.
• R-squared for this model is 0.808842. What this shows is that around
81% of sample variation in GDP has been explained by independent
variables. That is, inflation, unem_rate, net export, together explain
about 85% of variation in GDP for this sample.
our equation

•• 6880.478
  – 541.5884
Hypothesis testing

••   we will analyze and comment on the individual


Now
statistical significance of all coefficients in this model. To
show clearly what our null hypothesis is, and why the impact is
“statistically significant” or “insignificant”.

• 6880.478 – 541.5884
 Null hypothesis for

• H0: β1 =0,
• The null hypothesis implies that once “net_exp”,
“unemp_rate” have been controlled for, the partial effect
of “inflation’ on the expected value of GDP is zero.

Test statistic Value Df Probability


T-test -3.172413 34 0.0032
F-test 10.06421 (1,34) 0.0032
Chi-square 10.06421 1 0.0015

 Restricted model:

 Unrestricted model:
 Null hypothesis for
 Null hypothesis for

• H0: β2=0,
• The null hypothesis implies that once “inflation” and
“unemp_rate” have been controlled for, the partial effect
of “net_exp’ on the expected value of GDP is zero.
Test Value Df Probability
statistic
T-test -8.857626 34 0.00000
F-test 78.45755 (1,34) 0.00000
Chi-square 78.45755 1 0.00000

 Restricted model:
 Unrestricted model:
 Null hypothesis for
 Null hypothesis for

• H0: β3=0,
• The null hypothesis implies that once “inflation” and
‘’net_exp’’ have been controlled for, the partial effect of
“unemp_rate” on the expected value of GDP is zero.

Test statistic Value Df Probability


T-test 0.109105 34 0.9138
F-test 0.011904 (1,34) 0.9138
Chi-square 0.011904 1 0.9131
 Null hypothesis for

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