Econometrics Asignmnet using E-VIEWS SOFTWARE Essay

Econometrics Asignmnet using E-VIEWS SOFTWARE - Essay Example The company can estimate the sales to be using a regression model. The sales depend on the variables mentioned such as the USA nominal GDP, USA unemployment rate and the PMI index. The report provides a correlation matrix and regression model with the data on the sales being regressed and the output analysed. The correlation matrix shows that the variable for sales is significantly correlated with the USA GDP nominal with a positive Pearson coefficient of .957 (which shows a very strong positive correlation). The other two variables are also correlated with the dependent variable (with PMI index being negatively correlated with the dependent variable while USA unemployment rate having a positive correlation) they are however not significant at 5% significance level. The results from the regression model show that the explanatory variables have a lot of impact on the dependent variable (Sales). The study established that approximately 95.91% of variation in the dependent variable (sal es) is explained by the three explanatory variables (USA nominal GDP, USA unemployment rate and the PMI index) in the model. According to Creswell (2003), regression analysis is a statistical tool that is usually utilized by many researchers to investigate the relationship that exists if any between two or more variables. The aim of the investigation is to find a causal effect relationship. Using the data, the researcher can assess the statistical significance of the relationships that have been estimated. The level of confidence that is to be established is that the estimated relationship is close to the actual relationship. Regression analysis has been in use for many years and it has increasingly been applied in various disciplines (Jankowicz, 2005). This study uses regression analysis to establish the relationship that exists between the actual sales made by 3M Company and the independent variables. Using a regression model, the company will find a viable way of determining its