Homework 6 , Due December 7. You should email your homework to ‘Do Lee’
Your task is to come up with a theory involving a couple or more variables in FRED
(https://fred.stlouisfed.org/ )and test your theory. For example we theorized that output is a function of
capital, labor and schooling, and checked if the log of output is linearly dependent on the other variables
by running a multiple regression. But you have to come up with your own theory and first explain its logic in
a paragraph. IT DOES NOT MATTER IF IT TURNS OUT TO BE CORRECT OR NOT. The point is to then test it by
running a regression, and explain if the regression results supports or confirms your theory. This is a
learning exercise, so do not worry too much about whether your theory is correct. It is hard to do good
theory. Just show the regression results and discuss whether or not they support your theory. You may
add XY scatter plots if you wish.
For running a regression in Excel enable the Analysis ToolPak add-in, (under File/ Options/ Add-ins). Then
go to the Data tab in the main toolbar, then go to Data Analysis, and pick Regression. If Data Analysis does
not show under the Data tab, you have to load it. See
Note that you should copy data from FRED onto excel into separate adjacent columns on the same sheet:
the data should be in consecutive adjacent columns. You have to specify which column is the dependent
variable, or y-input, and which columns are the independent variables, or the x-inputs. Also eliminate all
observations which have missing data in any one of the variables. Excel does not like empty cells when
running regressions.
If you are familiar with another statistical package for running regressions, for example STATA, and you
prefer to use it instead of Excel, feel free to do so.