# Regression helpWatch

#1
Hi,

I have some stats assignment, but was just slightly confused about the last part.

I had to find the regression line of Y on X which was fine, then later on, the regression of ln Y on ln X, which was also fine. I got a better R^2 value for the latter, and the last part of my question asks "Why might an economist be interested in the results of a regression of ln(Y ) on ln(X)". I wasn't really sure how the ln value could help in statistical analysis, anybody have any ideas?

Thanks!
0
8 years ago
#2
The higher R^2 value suggests the ln model is more appropriate. Since a greater proportion of the variation in ln(Y) can be explained by the variation in ln(X).
0
#3
(Original post by vc94)
The higher R^2 value suggests the ln model is more appropriate. Since a greater proportion of the variation in ln(Y) can be explained by the variation in ln(X).
Ahh sorry, I forgot to mention I know that, I was just a bit confused about the last part, what application could using a regression of ln x and ln y have over those of just x and y?
0
8 years ago
#4
(Original post by Solid_Snake_100)
Ahh sorry, I forgot to mention I know that, I was just a bit confused about the last part, what application could using a regression of ln x and ln y have over those of just x and y?
If your x,y data seems to have an exponential pattern then the regression of lnX and lnY may be easier to deal with???

Not sure what the question is after!
0
8 years ago
#5
(Original post by Solid_Snake_100)
Ahh sorry, I forgot to mention I know that, I was just a bit confused about the last part, what application could using a regression of ln x and ln y have over those of just x and y?
Regressions using natural logs is the same as percentage changes, i.e. you now have the growth rate of y regressed on the growth rate of x. This is why economists like it.
0
#6
(Original post by little_wizard123)
Regressions using natural logs is the same as percentage changes, i.e. you now have the growth rate of y regressed on the growth rate of x. This is why economists like it.
Ahhh ok, thanks for the help, don't think i've read about that before.
0
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