Econometrics 1 Assignment: Statistical Significance and Model Analysis

This econometrics assignment analyzes a model relating economic growth to government debt and net foreign direct investment (NFDI). It begins by testing the statistical significance of the model, finding no significant relationship between the variables. The Breusch-Pagan test is then applied to further assess the model's validity. The interpretation of the GOVDEBT coefficient is discussed, and the signs of the GOVDEBT and NFDI coefficients are evaluated in relation to economic theory. The assignment concludes with a discussion of how the model could be improved, suggesting the inclusion of additional variables, plotting variables in graphs, and applying R-squared and adjusted R-squared to the factors defined in model 1, along with the application of a linear regression equation and residual plots to find the effectiveness of the model.