in the following models, paying attention to the functional form, how would you interpret the coefficient b1;
(I) log(price)=b0+b1log(nox) +b2 rooms +U
(ii) In(y)= b0 +b1 x +u
(iii) y=b0 +b1 In(x) +u
(iii) In(y)=b0 +b1 In(x) + u
Answer
(I)
log(price)=b0+b1log(nox) +b2 rooms +U
b1 will be interpreted as follows :
1% increase in nox will result in increase in Price by b1%
(ii)
In(y)= b0 +b1x +u
b1 will be interpreted as follows
1 unit increase in x will result in increase in y by (100*b1)%
(iii)
y=b0 +b1 In(x) +u
b1 will be interpreted as follows
1% increase in x will result in increase in y by (b1/100) units.
(iv)
In(y)=b0 +b1 In(x) + u
b1 will be interpreted as follows
1% increase in x will result in increase in y by b1%.
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