Regression Models

patriks

Hello all,

I'm currently designing some regression models for one of my Economics undergraduate modules.
As I was saying, this is a multiple linear regression model, and I was just looking for some clarification on the following function:
y = β1 + β2x + β3x2 + β4x3
where: y = investment, x = GDP, x2 = Interest Rate and x3 = Inflation.

Are the signs (+/-) for each of the following independent variables correct?
The form of the sign is determined with respect to the effect that the explanatory variable (x) has on the dependent variable (y).
I.e. An increase in x/x2/x3 has a positive/negative effect on y.

GDP = positive (+)
Interest Rate = negative (-)
Inflation = negative (-)

Thanks in advance!

You'd be best to put up the whole output from the regression

Time Magazine

You would expect that:

GDP = positive (+)
Interest Rate = negative (-)
Inflation = negative (-)

However, that's just what you expect. Your regression results will determine the sign.

patriks

Hey guys,

Sorry, I should have phrased that with a little more clarity. The question was, in fact, pertaining to the expected signs.

Thanks a million, everybody!