Introduction

Objectives

We have shown how to use regression analysis and R to answer a substantive question: Does trade promote economic growth? We have demonstrated how to specify a statistical model from a theoretical argument, prepare data, estimate and interpret the statistical model, and use the estimated results to make inferences and answer the question of interest. The validity of our findings depends on whether the assumptions for the statistical model are satisfied or not and how sensitive the results are to assumption violations. In this section, we will demonstrate how to conduct diagnostic tests and sensitivity analysis in R.