Construction of the causal model - regression analysis, Managerial Economics

Assignment Help:

Q. Construction of the causal model - regression analysis?

The construction of an explanatory model is a crucial step in the regression analysis. It should be defined with reference to the action theory of intervention. It is likely that different kinds of variable exist. In a number of cases, they may be specially created, for instance to take account of the fact that an individual has benefited from support or not (a dummy variable, taking values 0 or 1). A variable can also represent an observable characteristic (having a job or not) or an unobservable one (probability of having a job). The model may suppose that a particular variable develops in a linear, logarithmic, exponential or other way. All the explanatory models are constructed on the foundation of a model, like the following, for linear regression: 

Y = β0 + β1X1 + β2X2 + .... + βkXk + ε, where

Y is the change that programme is primarily supposed to produce (for example employment of trainees)

X1-k are independent variables likely to describe the change.

β0-k are constants and 

ε is the error term  

Phenomena of co-linearity weaken the explanatory power. For instance, when questioning women about unemployment, if they have experienced periods of previous unemployment that are systematically longer than those of men, it won't be possible to separate the influence of the two explanatory factors: gender and duration of previous unemployment.


Related Discussions:- Construction of the causal model - regression analysis

Show the characteristics of monopoly, Q. Show the Characteristics of monopo...

Q. Show the Characteristics of monopoly? Let's summarise the main characteristics of monopoly as under: Cross-elasticity of demand for a monopoly product is zero in the

Limitation of managerial economics, what are the limitation of managerial e...

what are the limitation of managerial economics and what is the solution of it?

Caselet, plot the demand schedule and draw the demand curve for the data gi...

plot the demand schedule and draw the demand curve for the data given for marijuana in the case above

Profession, list all profession which generate personal income

list all profession which generate personal income

Show normal profit equilibrium, Q. Show Normal profit equilibrium? Nor...

Q. Show Normal profit equilibrium? Normal Profits: With the condition of  MC = MR and MC cuts the MR from below, if E is the point of stable equilibrium, output of firm is OM

Explain about linear isoquant, Q. Explain about Linear Isoquant? : In...

Q. Explain about Linear Isoquant? : In this case, isoquant would be straight lines as in Figure below. This type presumes perfect substitutability of factors of production. I

Central characteristics of simon satisfying behaviour model, Q. Central cha...

Q. Central characteristics of Simon satisfying behaviour model? The pattern of policy commitments which result from the bargaining process can be seen to be a specification of

Advantages of indirect taxes, Advantages a. They are less costly to ...

Advantages a. They are less costly to administer because the producers and sellers themselves deposit them with the government. b. If levied on goods with inelastic deman

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd