INTRODUCTION TO ECONOMETRICS II ECO 306 NOUN 90 transformation in which there is increase or decrease in the linear relationship of the variables involved.
2.4.5.0 CONCLUSION In this unit the concept of transformation of variables is discussed to show that regression analysis can be extended to fit nonlinear models through transformation of nonlinear models. That nonlinearity in the variables can always be sidestepped by using appropriate definitions. Example of these definitions is taking logarithm of the nonlinear model and application of the least squares principle when the model cannot be linearised.
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