Thread: Regressing trending variables

I was wondering what is the effect of say regressing a dependent variable that has a positive trend with an independent variable that has a downward trend?

Thanks!

Assume regression y=f(x). Now you say y increases as x decreases?

Sorry what I meant was in a time series context.

Say you have this regression:

where y_t is a positive trending time series variable and x_t is a negative trending time series data, in general would it be a good idea to add a time trend variable if the dependent variable is upwards trending and the independent variable is downwards trending? Ie, use the regression:

Originally Posted by usagi_killer

Sorry what I meant was in a time series context. Say you have this regression: where y_t is a positive trending time series variable and x_t is a negative trending time series data, in general would it be a good idea to add a time trend variable if the dependent variable is upwards trending and the independent variable is downwards trending? Ie, use the regression:

You are actually talking about these two regressions:





The 1st one doesn't look good!

Thanks for that, why would you pick the 2nd one over the first one?