Graph the Data

To generate a graph of the food expenditure data that resembles the one in Figure 2.6 of POE,

you can use the 1= button on the gretl toolbar (third button from the right). Clicking this button brings up a dialog to plot the two variables against one another. Figure 2.4 shows this dialog where x is placed on the x-axis and y on the y-axis. The result appears in Figure 2.5. Notice that the labels applied above now appear on the axes of the graph.

image023

Figure 2.5: XY plot of the food expenditure data

Figure 2.5 plots food expenditures on the y axis and Weekly Income on the x. Gretl, by default, also plots the fitted regression line. The benefits of assigning labels to the variables becomes more obvious. Both X – and Y-axes are informatively labeled and the graph title is changed as well. More on this later.

Fife

lools Data

View Add Sample Variable

Model HelD

food. gdt

w Ordinary Least Squares…)

ID# *

Variable name < Descriptive label

Instrumental variables

0

const

auto-generated constant

Other linear models

1

food_exp

household food expenditure

Nonlinear models

l

income

weekly household income |

Time series

Figure 2.6: From the menu bar, select Model>Ordinary Least Squares to open the least squares dialog box

image024

Figure 2.7: The Specify Model dialog box opens when you select Model>Ordinary least squares

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