by Guinandra Jatikusumo
What sort of new hobby do economics students who just completed an econometrics class acquire? Regressing. Some of my friends and I will nearly finish our econometrics class, and it has somewhat become our new hobby (sometimes, if assignments are not due the day after) to find variables and data, open Stata, and regress. It’s just fun to see how sometimes variables that aren’t intuitively correlated are statistically significant in a 5% level, using proper regression methods and techniques.
Like this time series regression. Who ever thought that 99% of variation in the S&P 500 is explained by butter production in Bangladesh?