This article is based on a real world example from regional economics. It is a mathematical presentation of the principles of econometric theory. Its objective is to acquaint readers with a simple mathematical training. Regression is used throughout the text to demonstrate the points made. Model development is stressed early on. There is also a discussion of least squares fitting. Special emphasis is put on model evaluation : how well do the coefficient estimates conform to a priori expectations ? Are the signs and magnitude "Correct" ? Are the coefficients different from zero ? The consequence of multicollinearity and the effects of various specification errors are discussed in detail. A final section is devoted to covariance analysis and dummy variable technique.
