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if i want to conduct a chow test, what is my dependent variable Consider the following...

if i want to conduct a chow test, what is my dependent variable

Consider the following data for savings in the US and conduct Chow test (F-test) to see if there was a structural change in reference to the 1981 recession

Savings and personal disposable

Year Saving Income

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It is most appropriate to use the saving as dependent variable and personal disposable income as independent variable.

we know that dependent variable depends upon the independent variable and independent is not dependent on any thing.

So, if we consider the saving as dependent, then it is logical to think saving dependent upon the personal disposable income because personal disposable income can be used for saving, but we would not be able to predict the personal disposable income based on the savings.

Therefore, considering saving as dependent variable and personal disposable income as independent variable is the right approach to conduct the chow test.

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