Nonlinear Regression Functions Metrics Lab

Think of Diminishing Marginal Returns

Interpreting the Estimated Regression Function

What is the explanation behind? The “effect” of a change in income is greater at low than high income levels (perhaps, a declining marginal benefit of an increase in school budgets?) Other explanations…

Cubic Specification STATA

Total Production Function

Natural Logarithm

The three log regression specifications:

Logarithms in Stata Syntax: generate lnx = ln(x) generate logy = log(y) (Varname) = Expression

I. Linear-log population regression function

Linear-log case, continued

Example: TestScore vs. ln(Income)

II. Log-linear population regression function

Log-linear case, continued Standard Error of the Regression

III. Log-log population regression function

Log-log case, continued

Example: ln( TestScore) vs. ln( Income)

Summary: Logarithmic transformations

Summary: Nonlinear Regression Functions

Try it on Stata!!

Stop by the lab or email with questions Source: http://www.econ.brown.edu/fac/Frank_Kleibergen/ec163/ch08_slides_1.pdf