Regression analysis is the statistical technique most frequently used in the field of economics to process empirical evidence and to test the explanatory power of theoretical models. In order to forecast future consumption and compare the results to theoretical models, simple and multiple regressions were run. All data needed to run the regression was taken from the Federal Reserve Bank of St. Louis data bank (FREDDATA). Monthly data in chained 1992 dollars is used for both consumption expenditure and di

Next we must observe the p-value, or probability value. The p-value represents the probability of finding sample results as abnormal as the one that was actually observed (Picconi, Olson, and Romano, 345). Since the p-value for YPDI-7 lag was exceptionally small, the equation is statistically significant. The smaller the p-value indicates a greater significance. The p-values shown in the chart below indicate a high level of significance.

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