Two variable regression model could have three functional forms as given below:

Deciding which of the three functional forms of the two-variable regression model is the best fit for a given econometric problem requires a careful analysis of the data and the assumptions underlying each model. The decision should be based on the principles of economic theory, statistical significance, and goodness-of-fit criteria.

Economic Theory:
The first step is to consider the economic theory underlying the relationship between the dependent variable Y and the independent variable X. If the theory suggests a linear relationship between Y ___ _________ __________ _____ _________ ____ ______ _____ ____ _____ ______.
_____ __________ _________ ______ ________ __________ _________ _____ ___ ______.
________ _________ _______ ____ _____ _____.
_____ __________ ___ __________ ____ ___ _____.
___ _______ _______ ______ ______ __________ ________ ____ ___ _______ ______ __________.
________ __________ ________ ______ __________ _______ _____ _________ _____.
______ ___ ___ ________ _______ ___ __________.
_________ _______ ________ __________ ______ _________ __________ ________.
_______ ________ _____ _____ ____ ______ ________ ________ ______.
___ ___ _________ ______ ____.
________ __________ ____ ___ ___ ___ _______ __________ ________.
_______ ________ ___ ______ _________.
_______ _____ ______ _________ ________ ____ ____ _______ _______ ____ ___ __________.
__________ _______ __________ _________ ____.
____ _________ _________ ______ _________ _______ _____ __________ _____ _________ ____.
_____ _________ ______ ________ ____ ______ __________ ___ ______ _______.
_________ ___ ___ ____ _________ ________ __________ ___ __________ _______ ________ ______.
_________ __________ _________ _______ _____ _____ ___ _______ ___ _______ ___ __________.
________ _____ ______ ____ ___ ___ ____ _______ _______.
______ _____ ________ ______ _______ ____ ______ __________ _______ _____.
_______ ________ ______ ___ _____.
_________ ___ __________ ___ ___.
_________ ___ ________ ___ ____ __________ _______ ____ ____.
___ ____ __________ ___ _____.
__________ _____ ________ _____ _____.
___ ________ _________ _________ _________ ________ ____ _________ ________ ________ _________ _________.
__________ ______ _________ _________ _____.
_______ ______ ________ __________ _________ _______ _____ ____.
___ ______ __________ ____ ____ ______ ____.
____ ___ _______ __________ ________ ____ __________ _____ __________ ____ ___.
_______ ________.
Get Full Answer on WhatsApp