I am regressing per capita health expenditure on per capita GDP. I have 3 data columns (health expenditure, gdp, population)
So my regression function is healthexpenditure/population = b0 + b1.(gdp/population)
1) My question will be what are the possible problems of this model? Is dividing dependent and independent variable with population number problematic? This is a theoritical question, I want to explore possible biases in my simple model.
2) Suppose that I have plotted my data and it looks like this. Do you see a problem that are related?