伍德里奇计量经济学讲义2.pptVIP

* Multiple Regression Analysis y = b0 + b1x1 + b2x2 + . . . bkxk + u 7. Specification and Data Problems * Functional Form We’ve seen that a linear regression can really fit nonlinear relationships Can use logs on RHS, LHS or both Can use quadratic forms of x’s Can use interactions of x’s How do we know if we’ve gotten the right functional form for our model? * Functional Form (continued) First, use economic theory to guide you Think about the interpretation Does it make more sense for x to affect y in percentage (use logs) or absolute terms? Does it make more sense for the deri