ECONOMETRICS PROJECT

Pana Elena Bianca

Group 137

Introduction
In this paper I have described the association between one dependent variable and two
independent ones.The dependent variable I chose to be the profit/loss of the P&G
company,during a period of time of 10 years.The two independent variables are:the expenses
and the cost of goods sold by the company.

In order to predict the relationship between the variables, I have chosen the SPSS software to
analyse the simple and multiple regression methods,and for the chi-squared the Eviews
software.

Simple Regression Method

Descriptive Statistics

Mean Std. Deviation N

ProfitLossMillionsofUS$
37,603636 3,4455571 11
Profit/Loss(Millions of US$)

ExpensesMillionsofUS$
60,935727 5,5104418 11
Expenses(Millions of US$)
 Correlations

ProfitLossMillion ExpensesMillion
sofUS$ sofUS$
Profit/Loss(Millio Expenses(Millio
ns of US$) ns of US$)

ProfitLossMillionsofUS$
1,000 ,866
Profit/Loss(Millions of US$)
Pearson Correlation
ExpensesMillionsofUS$
,866 1,000
Expenses(Millions of US$)

ProfitLossMillionsofUS$
. ,000
Profit/Loss(Millions of US$)
Sig. (1-tailed)
ExpensesMillionsofUS$
,000 .
Expenses(Millions of US$)

ProfitLossMillionsofUS$
11 11
Profit/Loss(Millions of US$)
N
ExpensesMillionsofUS$
11 11
Expenses(Millions of US$)

Variables Entered/Removeda

Model Variables Variables Method

Entered Removed

ExpensesMillion
sofUS$
1 . Enter
Expenses(Millio
ns of US$)b

a. Dependent Variable: ProfitLossMillionsofUS$

Profit/Loss(Millions of US$)

b. All requested variables entered.

 Model Summaryb

Model R R Square Adjusted R Std. Error of the Durbin-Watson

Square Estimate

1 ,866a ,749 ,721 1,8190944 ,970

a. Predictors: (Constant), ExpensesMillionsofUS$ Expenses(Millions of US$)

b. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

ANOVAa

Model Sum of Squares Df Mean Square F Sig.

Regression 88,937 1 88,937 26,876 ,001b

1 Residual 29,782 9 3,309

Total 118,719 10

a. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

b. Predictors: (Constant), ExpensesMillionsofUS$ Expenses(Millions of US$)

Coefficientsa

Model Unstandardized Coefficients Standardized T

Coefficients

B Std. Error Beta

(Constant) 4,626 6,385 ,724

1
ExpensesMillionsofUS$
,541 ,104 ,866 5,184
Expenses(Millions of US$)

Coefficientsa
Model Sig. 95,0% Confidence Interval for B Correlations

Lower Bound Upper Bound Zero-order

(Constant) ,487 -9,818 19,069

1
ExpensesMillionsofUS$
,001 ,305 ,777 ,866
Expenses(Millions of US$)

Coefficientsa

Model Correlations Collinearity Statistics

Partial Part Tolerance VIF

(Constant)

1
ExpensesMillionsofUS$
,866 ,866 1,000 1,000
Expenses(Millions of US$)

a. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

Collinearity Diagnosticsa

Model Dimension Eigenvalue Condition Index Variance Proportions

(Constant) ExpensesMillion
sofUS$
Expenses(Millio
ns of US$)

1 1,996 1,000 ,00 ,00

1
2 ,004 23,239 1,00 1,00

a. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

 Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N

Predicted Value 32,282211 41,952290 37,603636 2,9822256 11

Residual -3,2418666 2,4346814 0E-7 1,7257444 11

Std. Predicted Value -1,784 1,458 ,000 1,000 11

Std. Residual -1,782 1,338 ,000 ,949 11

a. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

Charts
Because the slope is tending to +2,it means that there is a stong intensity positive
correlation.It means that we have an elastic relationship.R squared is 0,72,meaning that 72%
out of the profit/loss variation is due to the expenses,holding constant the other factor of
influence.In the anova table,we have the statisticly significant finding p value less than
0.05(0.001),which means that there is no risk to wrongly reject H0(the value of the profit/loss
does not depend on the value of the expenses).It means that the regression model is
significant.The two variables have a positive association,because as Expenses increase,so
does the profit.This is a linear relationship.Because Beta=0,86,it means that if expenses get
bigger with 1 million of US dollars,the profit/loss increases with 0,86 millions in one year.
Multiple Regression Method

Descriptive Statistics

Mean Std. Deviation N

ProfitLossMillionsofUS$
37,603636 3,4455571 11
Profit/Loss(Millions of US$)

ExpensesMillionsofUS$
60,935727 5,5104418 11
Expenses(Millions of US$)

CostofgoodssoldMillionsofU
S$ Cost of goods 37,585727 2,8873491 11
sold(Millions of US$)

Correlations

ProfitLossMillion ExpensesMillion Costofgoodssol

sofUS$ sofUS$ dMillionsofUS$
Profit/Loss(Millio Expenses(Millio Cost of goods
ns of US$) ns of US$) sold(Millions of
US$)

ProfitLossMillionsofUS$
1,000 ,866 ,749
Profit/Loss(Millions of US$)

ExpensesMillionsofUS$
,866 1,000 ,958
Pearson Correlation Expenses(Millions of US$)

CostofgoodssoldMillionsofU
S$ Cost of goods ,749 ,958 1,000
sold(Millions of US$)
 ProfitLossMillionsofUS$
. ,000 ,004
Profit/Loss(Millions of US$)

ExpensesMillionsofUS$
,000 . ,000
Sig. (1-tailed) Expenses(Millions of US$)

CostofgoodssoldMillionsofU
S$ Cost of goods ,004 ,000 .
sold(Millions of US$)

ProfitLossMillionsofUS$
11 11 11
Profit/Loss(Millions of US$)

ExpensesMillionsofUS$
11 11 11
N Expenses(Millions of US$)

CostofgoodssoldMillionsofU
S$ Cost of goods 11 11 11
sold(Millions of US$)

Variables Entered/Removeda

Model Variables Variables Method

Entered Removed

Costofgoodssold
MillionsofUS$
Cost of goods
sold(Millions of
1 US$), . Enter
ExpensesMillion
sofUS$
Expenses(Millio
ns of US$)b

a. Dependent Variable: ProfitLossMillionsofUS$

Profit/Loss(Millions of US$)

b. All requested variables entered.

 Model Summaryb

Model R R Square Adjusted R Std. Error of the Durbin-Watson

Square Estimate

1 ,909a ,826 ,783 1,6050414 1,291

a. Predictors: (Constant), CostofgoodssoldMillionsofUS$ Cost of goods sold(Millions of

US$), ExpensesMillionsofUS$ Expenses(Millions of US$)

b. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

ANOVAa

Model Sum of Squares Df Mean Square F Sig.

Regression 98,109 2 49,055 19,042 ,001b

1 Residual 20,609 8 2,576

Total 118,719 10

a. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

b. Predictors: (Constant), CostofgoodssoldMillionsofUS$ Cost of goods sold(Millions of US$),

ExpensesMillionsofUS$ Expenses(Millions of US$)

Coefficientsa

Model Unstandardized Coefficients Standardized t

Coefficients

B Std. Error Beta

 (Constant) 12,705 7,076 1,795

ExpensesMillionsofUS$
1,120 ,320 1,791 3,497
Expenses(Millions of US$)
1

CostofgoodssoldMillionsofU
S$ Cost of goods -1,153 ,611 -,966 -1,887
sold(Millions of US$)

Coefficientsa

Model Sig. 95,0% Confidence Interval for B Correlations

Lower Bound Upper Bound Zero-order

(Constant) ,110 -3,612 29,022

ExpensesMillionsofUS$
,008 ,381 1,858 ,866
Expenses(Millions of US$)
1

CostofgoodssoldMillionsofUS$
Cost of goods sold(Millions of ,096 -2,562 ,256 ,749
US$)

Coefficientsa

Model Correlations Collinearity Statistics

Partial Part Tolerance VIF

(Constant)

ExpensesMillionsofUS$
,778 ,515 ,083 12,086
1 Expenses(Millions of US$)

CostofgoodssoldMillionsofUS$ Cost
-,555 -,278 ,083 12,086
of goods sold(Millions of US$)

a. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

 Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N

Predicted Value 32,416374 42,191097 37,603636 3,1322415 11

Residual -3,1376197 1,7011353 0E-7 1,4355927 11

Std. Predicted Value -1,656 1,465 ,000 1,000 11

Std. Residual -1,955 1,060 ,000 ,894 11

a. Dependent Variable: ProfitLossMillionsofUS$ Profit/Loss(Millions of US$)

Charts
The slope is tending to +2,it means that there is a stong intensity positive correlation.This
means that we have an elastic relationship.R squared is 0,78,meaning that 78% out of the
profit/loss variation is due to the expenses and on the costs of goods sold,holding constant the
other factor of influence.In the anova table,we have the statisticly significant finding p value
less than 0.05(0.001),which means that there is no risk to wrongly reject H0(the value of the
profit/loss does not depend on the value of the expenses and on the value of the cost of goods
sold).It means that the regression model is significant.The variables in the scatterplot have a
positive association,because as the expenses and the cost of goods sold increase,so does the
profit/loss variable.The relationship is linear.
Chi Square(Eviews)

Heteroskedasticity Test: White

Null hypothesis: Homoskedasticity

F-statistic 1.009618 Prob. F(5,5) 0.4959

Obs*R-squared 5.526323 Prob. Chi-Square(5) 0.3551
Scaled explained SS 3.021954 Prob. Chi-Square(5) 0.6966

Test Equation:
Dependent Variable: RESID^2
Method: Least Squares
Date: 01/14/19 Time: 21:44
Sample: 2007 2017
Included observations: 11

Variable Coefficient Std. Error t-Statistic Prob.

C -693.1280 578.8004 -1.197525 0.2848

COST_OF_GOODS_SOLD_MILLIONS_O... -2.472241 1.234851 -2.002057 0.1017
COST_OF_GOODS_SOLD_MILLIONS_O... 1.714118 1.560040 1.098765 0.3219
COST_OF_GOODS_SOLD_MILLIONS_O... 81.64488 77.40292 1.054804 0.3398
EXPENSES_MILLIONS_OF_US$_^2 -0.308570 0.622157 -0.495968 0.6409
EXPENSES_MILLIONS_OF_US$_ -27.20515 28.95186 -0.939668 0.3905

R-squared 0.502393 Mean dependent var 1.873569

Adjusted R-squared 0.004786 S.D. dependent var 2.825593
S.E. of regression 2.818823 Akaike info criterion 5.212968
Sum squared resid 39.72883 Schwarz criterion 5.430002
Log likelihood -22.67132 Hannan-Quinn criter. 5.076159
F-statistic 1.009618 Durbin-Watson stat 2.412036
Prob(F-statistic) 0.495938