Table = 10.

15

R=a+u1+u2+n+x+ex0+ex1+e

Quick ---- Estimate Equetion (r c u1 u2 n x ex0 ex1) ok.

Circle = No significant impact of independent variable, as prob value is greater than 0.05,

Without circle variable shows significant impact of independent variable, as prob value is less than 0.05.

Multicolinearity:
Negative relationships between Std Error & T-Statistics

Coefficient divided by std Error = T-tatistic

r u1 u2 x n ex0 ex1
Date: 16-12-2017
Unit Root Test:

Unit root test is run when the time series data under the observation. The time series data usually non-
stationary. We must convert the non-stationary into stationary then take the variables into the model.
To make the results accurate otherwise the result will be vague. The following variables from the table
17.10 has been taken to prove the Unit root test and make the non-stationary variables, into stationary.

The variables names are Production and Compensations.

Null Hypothesis: D(COMPENS) has a unit root

Exogenous: Constant
Lag Length: 0 (Automatic based on SIC, MAXLAG=9)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -4.212553 0.0020

Test critical values: 1% level -3.615588
5% level -2.941145
10% level -2.609066

*MacKinnon (1996) one-sided p-values.

The unit root test make the above variables stationary as shown from the their prob value less than
0.05 at first difference. D(Produc) and D(compens)

Null Hypothesis: D(PRODUC) has a unit root

Exogenous: Constant
Lag Length: 0 (Automatic based on SIC, MAXLAG=9)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -5.608193 0.0000

Test critical values: 1% level -3.615588
5% level -2.941145
10% level -2.609066

*MacKinnon (1996) one-sided p-values.

SIMPLE LINEAR REGRESSION:

When the impact or influence is checked of one variable on the other single variable is known as simple linear
regression. In this case on is dependent variable (Y) and other is independent variable (x). The following results are
taken and discuss in this regard.

The impact of interest on sales has been tested by simple linear regression as table showing below.s.

……..

Dependent Variable: SALES

Method: Least Squares
Date: 12/16/17 Time: 18:54
Sample: 1960 1999
Included observations: 40

Variable Coefficient Std. Error t-Statistic Prob.

C 84628.61 120390.4 0.702952 0.4864

INTEREST 31186.36 14231.56 2.191352 0.0346

R-squared 0.112192 Mean dependent var 336435.1

Adjusted R-squared 0.088828 S.D. dependent var 237945.8
S.E. of regression 227131.9 Akaike info criterion 27.55316
Sum squared resid 1.96E+12 Schwarz criterion 27.63760
Log likelihood -549.0631 Hannan-Quinn criter. 27.58369
F-statistic 4.802023 Durbin-Watson stat 0.022781
Prob(F-statistic) 0.034627

The interest has significant impact on the sales as its prob value is less than 0.05 (0.0346) and its t-statsis greater
than 2.193. It means that interest has positive impact on sales.