Given a sample of observations of each variable, in such a way
that the information can be referred to time periods (time-series
data) or can be referred to individuals, firms, etc.
(cross-section data), and assuming linearity, the model can be
specified as follows:
The right-hand side of (2.1) which includes the
regressors (), is called the
of the regression function, with
(
) being the coefficients or parameters of the
model, which are interpreted as marginal effects, that is to say,
measures the change of the endogenous variable when
varies a unit, maintaining the rest of regressors as
fixed. The error term
constitutes what is called the
of the model.
Expression (2.1) reflects equations, which can be
written in matrix form in the following terms:
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(2.3) |
Model (2.2) specifies a causality relationship among
,
and
, with
and
being considered the factors
which affect
.
In general terms, model (2.2)(or(2.1)) is
considered as a model of economic behavior where the variable
represents the response of the economic agents to the set of
variables which are contained in
, and the error term
contains the deviation to the average behavior.