Bivariate Relationship Between Output and Interest Rates

Question: Discuss about the Bivariate Relationship Between Output and Interest Rates. Answer: Introduction: Correlation coefficient refers to a statistical relationship between two given variables. The variables which may be related may be of two columns of given sets of data which were observed usually defined as a sample. The correlation coefficient is usually applied to statistics to determine how strong two variables are related. There are many types of correlation coefficient which are usually used in linear regression(Babbie, 2012). Scatter plot refers to a graph of plotted points which shows the relationship which exists in a given set of data. Scatter plots are very significant in the field of statistics as they can show the level of correlation between the data of observed phenomena or quantities which are usually referred to as variables. Apart from showing the correlation which exists in a given set of data they also show the sense of correlation(Babbie, 2012). The bivariate relationship is the relationship between two quantitative variables, and it can be done by scattering gram in which one variable's values plotted along the vertical axis and the others along the horizontal axis. The Pearson r is used in the cases when on want to find a linear relationship which exists between two given variable.it can be used either as associative or casual research hypothesis but it cannot be used together with an attributive RH due to its univariate. The Pearson r should be used in the cases where there is a significant effect. (P0.5) In the situations where it is a relationship between two variables. They can be either negative or positive correlation. The Pearson is used where the two quantitative are tested in the RH. This cannot test attributive RH, but can associative and causal(Huh, 2015). The Spearman's rank order correlation is the nonparametric version of the Pearson product moment correlation; Spearman correlation evaluates the monotonic relationship between two continuous or ordinal variables. Spearman correlation is usually applied to the evaluation of relationships involving ordinal variables. Reference Babbie, E. R. (2012). The Basics of Social Research. Texas: Cengage Learning. Huh, C. G. (2015). Asymmetry in the Bivariate Relationship Between Output and Interest Rates. London: Federal Reserve Bank of San Francisco.