• Story Name: Unemployment
  • Story Topics: Economics,
  • Datafile Name: Unemployment
  • Methods: Regression, Collinearity,
  • Abstract:

    This dataset contains the United States unemployment rate, Federal Reserve Board index of industrial production, and year of the decade for 1950-1959. Unemployment is a natural dependent variable.

    A regression of Unemployment versus FRB index shows that unemployment rises as industrial production rises, but the R-squared for this analysis is small.

    Adding the year variable to the regressionboosts the R-squared to 86.6%, but the coefficient of FRB index is now negative. The problems of this analysis stem from the high correlation between FRB index and year, resulting in collinearity.

  • Images:

    Unemployment 2

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