Linear Regression - transformations of variables (log-y instead of y, log-x instead of x)
3 important questions on Linear Regression - transformations of variables (log-y instead of y, log-x instead of x)
log-log log Yi = β0 + β1 log Xi + ui
elasticity: Xi increases by 1%, y increases by β1%
log-linear logYi=β0+β1Xi+ui
(dy/y)/dx: Xi increases by 1, y increases by 100β1%
linear-log Yi = β0 + β1 log Xi + ui
dy/(dx/x): Xi increases by 1%, y increases by 0.01β1
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