Reporting Results, and choosing a functional form'

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Reporting Results, and choosing a functional form.

• Hill et al chapter 6.

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Explained and Unexplained Variation
Total
Unexplained
Explained
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Decomposing the variation
link to proof
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Coefficient of determination

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Example
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Reporting Results
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Choosing a functional form

• Model has been assumed to be linear in the
  parameters.
• Linear in parameters parameters are not
  multiplied together, raised to a power etc.
• variables, however, can be transformed in any
  convenient way, as long as the resulting model
  satisfies assumptions SR1-SR5 of the simple
  linear regression model.

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A functional form for food expenditure
It is expected that food expenditure will rise at
a decreasing rate with income
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Some common functional forms
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Empirical issues
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An alternative functional form
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Are the residuals normal (Jarque-Bera)
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Appendix proof
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