1. ## 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!

2. ## Re: Regressing trending variables

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

3. ## Re: Regressing trending variables

Sorry what I meant was in a time series context.

Say you have this regression:

$\displaystyle y_t = b_0 + b_1 x_t$ 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:

$\displaystyle y_t = b_0 + b_1 x_t + b_2 t$

4. ## Re: Regressing trending variables

Originally Posted by usagi_killer
Sorry what I meant was in a time series context. Say you have this regression: $\displaystyle y_t = b_0 + b_1 x_t$ 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:
$\displaystyle y_t = b_0 + b_1 x_t + b_2 t$
You are actually talking about these two regressions:

$\displaystyle y(t)-b_1 x(t)=b_0$

$\displaystyle y(t)-b_1 x(t)=b_2 t+b_0$

The 1st one doesn't look good!

5. ## Re: Regressing trending variables

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