Regression Analysis with Cross-Sectional Data
5/25/05 11:46 AM Page 23. PART 1. Regression Analysis with Cross-Sectional Data P art 1 of the text covers Regression Analysis with Cross-Sectional data. It builds upon a solid base of college algebra and basic concepts in probability and statistics. Appendices A, B, and C contain complete reviews of these topics. Chapter 2 begins with the simple linear Regression model , where we explain one vari- able in terms of another variable. Although simple Regression is not widely used in applied econometrics, it is used occasionally and serves as a natural starting point because the algebra and interpretations are relatively straightforward. Chapters 3 and 4 cover the fundamentals of multiple Regression Analysis , where we allow more than one variable to affect the variable we are trying to explain.
2 24 The Simple Regression Model T he simple regression model can be used to study the relationship between two variables. For reasons we will see, the simple regression model has limitations
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