# How do I choose the correct model for a regression?

So the central question of my project is to what extent does a country's level of export contibution towards GDP (i.e. exports as a % of total GDP) affect its GDP growth.

I'm comparing this hypothesis for two different countries, China and India.

I have annual time-series data for exports as a % of total GDP for both countries and their GDP growth for the last 30 years, but I have no idea how to choose a correct model to begin to anaylse it with.

I was thinking of pehaps using Autoregressive model one, any thoughts? If this is correct then I how would I begin to model it using my data?

• I wonder if this is really more of a substantive / theoretical question for developmental economists than a statistical question. Are you wondering if growth in the portion of GDP due to exports correlates with growth in the portion not due to exports, or if it correlates at some lag, or if it Granger causes, etc? After all, exports won't be constant & unless the rest of the economy correspondingly shrinks, GDP will grow. – gung Apr 30 '15 at 16:26
• @gung is right: Although we would like to help, there is not sufficient information given to do so. If you could articulate, in a quantitative way, an economic theory concerning the relationships among your variables, then we could help you formulate it in a statistical fashion, but the stats site is not the place to be asking what economic models reasonably apply. – whuber Apr 30 '15 at 16:44
• Thank you all for your quick responses, I agree with the fact that my title itself is flawed. As I don't want to deviate too much from the topic and must perform some kind of econometric analysis, I was wondering as to the viability of changing the title to simplify it slightly. I could do this by simply looking at the total value of exports, and how they correlate with the total GDP of a country. I already have data for the last 30 years for both variables, and a preliminary graphical analysis does suggest a correlation. so surely I could model this new permutation? – Babar Sattar May 1 '15 at 17:41