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.
2.4.6.0 REFERENCES FURTHER READING Maddala, GS, &Lahiri, K. (1992).
Introduction to econometrics (Vol. 2). New York.
Dougherty, C. (2007).
Introduction to econometrics. Oxford University Press, USA
Dougherty, C. (2014).
Elements of econometrics.London:
University of LondonUNIT 5: DUMMY VARIABLES INTRODUCTION TO ECONOMETRICS II ECO 306 NOUN 91
CONTENTS 2.5.1.0 Introduction
2.5.2.0 Objectives
2.5.3.0 Main Content
2.5.3.1
The Dummy Variable Trap 2.5.3.2 Change of Reference Category
2.5.3.3 Slope Dummy Variables
2.5.4.0
Summary 2.5.5.0 Conclusion
2.5.6.0 Tutor-Marked Assignment
2.5.7.0 References/Further
Reading 2.5.1.0 INTRODUCTION It sometimes happens that some descriptive variables do exist in our regression equation,and/or the factors that you would like to introduce into a regression model are qualitative (racial, sex or age differences) in nature and therefore not measurable in numerical terms.
In such circumstances, dummy variables are utilised.
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