Consider the log-linear specification of equation (13.35).

(a) What is the expression for E(ln yi) in terms of α, β, and xi?

(b) Change xi by Δx. Write the new expected value of the dependent variable€as

(c) Use equation (5.13), regarding the expected value of a summation, and the approximation of equation (13.30) to rewrite

(d) Replace the answer to part c in the expression from part

b. Subtract the expression in part a and rearrange to obtain

Transcribed Image Text:

E[In (y, + Ay)] = + B (x + Ax).