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TERM PROJECT
NIIT UIVERSITY
MBA F&B Section - 1
Objective
To take various macroeconomic indicators and study the correlation and dependence of one indicator on
another and to derive regression models using SPSS tool.
Parameters Taken for Study: GDP Growth, Inflation Rate, Interest Rate, Fiscal Deficit and Export Rate.
Correlation:
Correlation is a statistical technique which tells us if two variables are related. The significance of the
correlation thus found is checked by hypothesis test.
Null Hypothesis: H0: The correlation between two variables is not significant
Alternate Hypothesis: Ha: The correlation between two variables is significant
Correlations
Per capita
GDP growth GDP growth
%
%
GDP growth %
Pearson
Correlation
Sig. (2-tailed)
N
Per capita GDP
growth %
Pearson
Correlation
Sig. (2-tailed)
N
Inflation rate
Pearson
Correlation
Sig. (2-tailed)
N
Interest rate
Pearson
Correlation
Sig. (2-tailed)
N
Fiscal deficit
Pearson
Correlation
Sig. (2-tailed)
N
Export %
33
.990
**
Interest
rate
Fiscal deficit
-.096
-.383
-.433*
.241
.000
.594
.028
.012
.176
33
33
33
33
33
-.092
**
**
.263
.000
-.482
-.492
.611
.005
.004
.140
33
33
33
33
33
33
-.096
-.092
.295
.113
-.276
.594
.611
.096
.532
.120
33
33
33
33
33
**
.295
**
-.387*
.028
.005
.096
.004
.026
33
33
33
33
33
33
**
.113
**
-.336
.012
.004
.532
.004
33
33
33
33
33
33
-.336
-.383
-.433
-.482
-.492
33
.491
.491
.056
Pearson
Correlation
.241
.263
-.276
-.387
Sig. (2-tailed)
.176
.140
.120
.026
.056
33
33
33
33
33
Export
%
.990
**
Inflation
rate
33
Between a pair of indicators, If the significance value is less than 0.05 then the null hypothesis is rejected (i.e.)
a significant correlation exists between them. Negative correlation sign indicates that the two parameters are
inversely related.
From the above output we can see a fair correlation between
1.
2.
3.
4.
Sum of
Squares
df
1
Regression 28.116
1
Residual
121.881
31
Total
149.997
32
a. Predictors: (Constant), Fiscal deficit
b. Dependent Variable: GDP growth %
Mean
Square
28.116
3.932
F
7.151
Sig.
.012a
As the P-value (1.2%) is less than the level of significance 5%, the null hypothesis is rejected, therefore the
model is significant.
Coefficientsa
Model
Unstandardized
Coefficients
B
Std. Error
1
(Constant) 10.347
1.596
Fiscal
-.740
.277
deficit
a. Dependent Variable: GDP growth %
Standardize
d
Coefficients
Beta
t
6.484
-.433
-2.674
Sig.
.000
.012
Sum of
Squares
df
1
Regression 57.240
1
Residual
180.667
31
Total
237.906
32
a. Predictors: (Constant), Fiscal deficit
b. Dependent Variable: Interest rate
Mean
Square
57.240
5.828
F
9.822
Sig.
.004a
As the P-value (0.4%) is less than the level of significance 5%, the null hypothesis is rejected, therefore the
model is significant.
Coefficientsa
Model
Unstandardized
Coefficients
B
Std. Error
1
(Constant) 8.075
1.943
Fiscal
1.056
.337
deficit
a. Dependent Variable: Interest rate
Standardize
d
Coefficients
Beta
t
4.156
.491
3.134
Sig.
.000
.004
Sum of
Squares
df
1
Regression 35.578
1
Residual
202.328
31
Total
237.906
32
a. Predictors: (Constant), Export %
b. Dependent Variable: Interest rate
Mean
Square
35.578
6.527
F
5.451
Sig.
.026a
As the P-value (2.6%) is less than the level of significance 5%, the null hypothesis is rejected, therefore the
model is significant.
Coefficientsa
Model
Unstandardized
Coefficients
B
Std. Error
1
(Constant 15.277
.698
)
Export % -.117
.050
a. Dependent Variable: Interest rate
Standardize
d
Coefficients
Beta
t
21.877
Sig.
.000
-.387
.026
-2.335
Sum of
Squares
df
1
Regression 12.341
1
Residual
38.952
31
Total
51.293
32
a. Predictors: (Constant), Interest rate
b. Dependent Variable: Fiscal deficit
Mean
Square
12.341
1.257
F
9.822
Sig.
.004a
As the P-value (0.4%) is less than the level of significance 5%, the null hypothesis is rejected, therefore the
model is significant.
Coefficientsa
Model
Unstandardized
Coefficients
B
Std. Error
1
(Constant) 2.434
1.037
Interest
.228
.073
rate
a. Dependent Variable: Fiscal deficit
Standardize
d
Coefficients
Beta
t
2.347
.491
3.134
Sig.
.026
.004
Sum of
Mean
Squares
df
Square
1
Regression 9.615
1
9.615
Residual
41.678
31
1.344
Total
51.293
32
a. Predictors: (Constant), GDP growth %
b. Dependent Variable: Fiscal deficit
F
7.151
Sig.
.012a
As the P-value (1.2%) is less than the level of significance 5%, the null hypothesis is rejected, therefore the
model is significant.
Coefficientsa
Model
Unstandardized
Coefficients
B
Std. Error
1
(Constant)
7.192
.619
GDP growth -.253
.095
%
a. Dependent Variable: Fiscal deficit
Standardize
d
Coefficients
Beta
t
11.619
-.433
-2.674
Sig.
.000
.012
Sum of
Squares
df
1
Regression 387.043
1
Residual
2201.043
31
Total
2588.086
32
a. Predictors: (Constant), Interest rate
b. Dependent Variable: Export %
Mean
Square
387.043
71.001
F
5.451
Sig.
.026a
As the P-value (2.6%) is less than the level of significance 5%, the null hypothesis is rejected, therefore the
model is significant.
Coefficientsa
Model
Unstandardized
Coefficients
B
Std. Error
1
(Constant) 28.603
7.798
Interest
-1.275
.546
rate
a. Dependent Variable: Export %
Standardize
d
Coefficients
Beta
t
3.668
-.387
-2.335
Sig.
.001
.026
Conclusion
The correlation between various economic indicators (GDP growth, Interest rate, Inflation rate, Export rate and
Fiscal Deficit) were studied and regression models were derived for the same using SPSS.
References:
Data Source: http://data.worldbank.org/country/india