hi,
because of the second order term, you do not have a single value for the "?"
if Y= a + bx+ cx^2 then an increase of 1 unit in x will cause an increase
DY = b + 2cx +c = b+ c(2x+1) in Y.
regards
Hi,
I have problem with interpretation of regression coefficients. My regression function is:
y = a + b1*x + b2*x^2
How can I interpret b1 and b2 ??
Its a relationship between monetary aggregate M2 (X) and GDP (Y). There are coefficients:
y = 588,63 + 0,6312*x - 0,000005*x^2
The interpretation should be: When M2 increases by 1 mil. EUR, we can except that HDP increases by "?" mil. EUR
And my question is, what is that "?" ?
Thank you
hi,
because of the second order term, you do not have a single value for the "?"
if Y= a + bx+ cx^2 then an increase of 1 unit in x will cause an increase
DY = b + 2cx +c = b+ c(2x+1) in Y.
regards
russel2000 (04-25-2015)
Well, because b1 is positive and b2 is negative implies that your (estimated) quadratic regression model indicates that as M2 increases GDP also increases - but at a diminishing rate i.e. the quadratic relationship between M2 and GDP is "concave down." Specifically, as M2 increases so does GDP - until M2 = 63119.1 and thus, GDP reaches its maximum at 20509.302. For values of M2 greater than 63119.1 than GDP decreases.
I think, I understand. Thank you very much
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