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Mastering Multiple Regression Analysis: A Step-by-Step Guide

Explore the intricacies of multiple regression analysis, adjusted coefficients, ANOVA, and common issues like multicollinearity, heteroskedasticity, and autocorrelation. Learn how to estimate demand, specify models, and interpret results using Excel's Analysis ToolPak.

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Mastering Multiple Regression Analysis: A Step-by-Step Guide

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  1. 1

  2. Multiple Regression Analysis Model:

  3. Multiple Regression Analysis Adjusted Coefficient of Determination

  4. Multiple Regression Analysis Analysis of Variance and F Statistic

  5. Problems in Regression Analysis • Multicollinearity: Two or more explanatory variables are highly correlated. • Heteroskedasticity: Variance of error term is not independent of the Y variable. • Autocorrelation: Consecutive error terms are correlated.

  6. Durbin-Watson Statistic Test for Autocorrelation If d = 2, autocorrelation is absent.

  7. Steps in Demand Estimation • Model Specification: Identify Variables • Collect Data • Specify Functional Form • Estimate Function • Test the Results

  8. Functional Form Specifications Linear Function: Power Function: Estimation Format:

  9. Chapter 4 Appendix

  10. Getting Started • Install the Analysis ToolPak add-in from the Excel installation media if it has not already been installed • Attach the Analysis ToolPak add-in • From the menu, select Tools and then Add-Ins... • When the Add-Ins dialog appears, select Analysis ToolPak and then click OK.

  11. Entering Data • Data on each variable must be entered in a separate column • Label the top of each column with a symbol or brief description to identify the variable • Multiple regression analysis requires that all data on independent variables be in adjacent columns

  12. Example Data

  13. Running the Regression • Select the Regression tool from the Analysis ToolPak dialog • From the menu, select Tools and then Data Analysis... • On the Data Analysis dialog, scroll down the list of Analysis Tools, select Regression, and then click OK • The Regression tool dialog will then be displayed

  14. Select the Data Ranges • Type in the data range for the Y variable or select the range on the worksheet • Type in the data range for the X variable(s) or select the range on the worksheet • If your ranges include the data labels (recommended) then check the labels option

  15. Select an Output Option • Output to a selected range • Selection is the upper left corner of the output range • Output to a new worksheet • Optionally enter a name for the worksheet • Output to a new workbook • And then click OK

  16. Regression Output

  17. Multiple Regression Data

  18. Regression Output

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