ANALYSIS OF FACTORS INFLUENCING THE ENGEL INDEX BASED ON REGRESSION MODELS
Keywords:
Engel Index, Multicollinearity, Ridge regression, Principal component regressionAbstract
This paper explores the macroeconomic indicators affecting the Engel Index. Initially, a multicollinearity test reveals the presence of multicollinearity among the independent variables. To eliminate multicollinearity, ridge regression modeling is employed. The analysis identifies six independent variables, with only one having an insignificant regression coefficient. The results show that labor force, urbanization rate, and trade balance are negatively correlated with the Engel Index, while the added value of the primary industry and the gross national income index are positively correlated with the Engel Index.References
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