Now we need to find our X variables. In our model we only have one X variable, which is Xt is the change in the percentage growth rate in real output, as measured by real GNP. We see that this variable is in the column marked GNPC96(%chg) which is in Column E. This data runs from April 1947 to October 2002 in cells E20-E242. Again you should write this down.
We've identified the data we need. We can now compute the regression coefficients using Excel. If you are not restricted to using a particular program for your regression analysis, I'd recommend using Excel. Excel is missing a lot of the features a lot of the more sophisticated econometrics packages use, but for doing a simple linear regression it is a useful tool. You're much more likely to use Excel when you enter the "real world" than you are to use an econometrics package, so being proficient in Excel is a useful skill to have.
Our Yt data is in cells G24-G242 and our Xt data is in cells E20-E242. When doing a linear regression we need to have an associated X entry for every Yt entry and vice-versa. The Xt's in cells E20-E23 do not have an associated Yt entry so we will not use them. We will use the Yt data in cells G24-G242 and our Xt data in cells E24-E242. Now that we have located the data we need, we can calculate our regression coefficients (our b1 and b2). Before continuing you should save your work under a different filename (I chose myproj.xls) so if we need to start over we have our original data.
Now that you've downloaded the data and opened Excel, we can go onto the next section. In the next section we calculate our regression coefficients.
Be Sure to Continue to Page 3 of "How to Do a Painless Econometrics Project"
