Consider the following models: ln Y i = 1 + 2 ln X

Question:

Consider the following models:

ln Y^∗_i = α₁ + α₂ ln X^∗_i + u^∗_i

ln Y_i = β₁ + β₂ ln X_i + u_i

where Y^∗_i = w₁Y_i and X^∗_i = w₂X_i , the w’s being constants.

a. Establish the relationships between the two sets of regression coefficients and their standard errors.

b. Is the r² different between the two models?

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Basic Econometrics

ISBN: 978-0073375779

5th edition

Authors: Damodar N. Gujrati, Dawn C. Porter

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Question Posted: Apr 30, 2018 03:38 AM

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Consider the following models: ln Y i = 1 + 2 ln X

Question:

Step by Step Answer:

a We can write the first model as ln w 1 Y i 1 2 lnw 2 X i u i ...View the full answer

Basic Econometrics

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