Statistical Inference and Application for Partially Linear Models

As partially linear regression model contains parameters part and the nonparametric part, it is better than the linear model. Partially linear regression model is more freedom, flexible, and can seize the characteristics of data. This passage first reduces the dimension of expenditure index data using principal component analysis. Then based on the dimension-reduced data, a partial linear model is established to forecast expenditure on army. The results show a great advantage over those by stepwise linear regression analysis.