Project Proposal_Arc..

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Submitted by Group 8:

Linzi Chen

Julian Archer

Shiyu Wang

To: Dr. Levine

Project Proposal

STAT 512- Section #2 (TTH/12:00pm-1:15pm)

Date: 10/17 th /2013

1.

Problem Statement

By definition the Gross domestic product (GDP) is an officially recognized index for indicating a country’s standard of living. It is specifically known as the market value obtained when making final consideration of all goods and services produced—within a given period—in a particular country.

Naturally it would be interesting to see what factors (variables) influence the GDP. Hence, our project aims at studying the relationship between the response (GDP) and predictors (Population,

Unemployment rate, Inflation, Export, Import, and Foreign direct investment). More importantly, we want to know if know more than one of the predictor variables helps better the GDP prediction.

Table 1 summarizes the details on these predictor variables.

Table 1: Description of the Predictor Variables

Predictor

Variable (X i

)

Population

Unemployment rate

Inflation

Export

Import

Foreign direct investment

Description

Number of people within a particular country

The percentage of the total labor force that is unemployed but available for seeking employment and willing to work

Inflation as measured by consumer price index reflects the annual percentage change in the cost of the average consumer of acquiring a basket of goods and science that may be fixed or changed at specific intervals

Exports of goods and services represent the value of all goods and other market services provided to the rest of the world

Imports of goods and services represent the value of all goods and other market services received from the rest of the world

Foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor

2.

Preliminary Analysis

Unit

Count

Unit

Percent

Percentage

Percentage of GDP

Percentage of GDP

US Dollars

2.1.

Descriptive Analysis

The first thing we will do after acquiring all of the relevant data points for the response and predictor variables is to observe the descriptive summary statistics. This will be accomplished using the UNIVARIATE command in the SAS software package.

2.2.

Correlation Analysis

Next, we will run correlation analyses to determine relationships between individual predictor variables and the response variable. The goal here would be to see which correlations are significant. This will be accomplished using the PROC CORR command in SAS.

2.3.

Significance Testing

Finally, our approach will be to run a multiple regression analysis to observe whether we can reasonably state that knowing one or more predictor variables help us determine the response variable. This will be accomplished using the PROC REG command in SAS.

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