The McGraw-Hill Series Economics essentials of economics brue, McConnell, and Flynn Essentials of Economics

partial correlation coefficient between 
Y
and 
X
2
, holding 
X
3
constant
r
1 3.2
=
partial correlation coefficient between 
Y
and 
X
3
, holding 
X
2
constant
r
2 3.1
=
partial correlation coefficient between 
X
2
and 
X
3
, holding 
Y
constant
EXAMPLE 7.5
GDP Growth
Rate and Relative
per Capita GDP
for 2007 in 190
Countries (in
billions of 2000
dollars)
As an additional economic example of the polynomial regression model, consider the
following regression results:
GDPG
i
5.5347 
5.5788 RGDP 
2.8378 RGDP
2
se 
=
(0.2435) (1.5995)
(1.4391)
(7.10.7)
R
2
=
0.1092
adj 
R
2
0.0996
Where GDPG 
GDP growth rate, percent in 2007, and RGDP 
relative per capita GDP
in 2007 (percentage of U.S. GDP per capita, 2007). The adjusted 
R
2
(adj 
R
2
) tells us that
after taking into account the number of regressors, the model explains only about
9.96 percent of the variation in GDPG. Even the unadjusted 
R
2
of 0.1092 seems low. This
might seem to be a disappointing value, but as we shall show in the next chapter,
such low 
R
2
values are frequently encountered in cross-sectional data with a large number
of observations. Besides, even an apparently low 
R
2
value can be statistically significant
(i.e., different from zero), as we will show in the next chapter.
*Optional.
Source: World Bank World
Development Indicators,
adjusted to 2000 base and
estimated and projected
values developed by the
Economic Research Service.
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