Linear regression belongs to the econometric methods of empirical research, which are applied in almost all sciences. Linear regression is set of econometric methods of estimating statistical causality between two or more factors (variables of interest).
The point is that a superficial analysis, which only looks at the numbers, without attempting to assess the underlying causal structures, cannot lead to a satisfactory data analysis … We must go out into the real world and look at the structural details of how events occur … The idea that the numbers by themselves […]Continue reading “On causality and econometrics — LARS P. SYLL”
Econometrics is part of the economic as a science, which deals with the statistical (empirical) modelling of economic theories (hypotheses) in order to explain, confirm or disprove economic theory empirically.
In regression analysis, the omitted-variable-bias is the error that is incurred on partial-effects-coefficients of other explanatory variables in a restricted regression model. Two factors play a role in the quantification of the omitted-variable-bias: Partial effects of the omitted-variable on the explained variable. Correlation and Covariance of omitted variable with the rest of the explanatory variablesContinue reading “How to explain the omitted variable bias”