Suppose output (Q) is related to labor (L) and capital (K) in the following nonlinear way: Q = aLbKc When taking log to this equation, it is transformed into a linear LnQ = lna + b ln(L) + c Ln (K) One hundred twenty-three observations are used to obtain the following regression results: Dependant Variable: Q R-square F-ratio p-value on F Observations: 123 0.7547 184.56 0.00001 Variable Parameter Estimate Standard error t-ratio p-value Intercept 5.5215 0.9750 5.66 0.0001 L 0.650 0.2950 2.20 0.0295 K 0.350 0.1450 2.41 0.0173 A. Write the regression equation based on the output either in the transformed linear form or the original non-linear form. B. How do we interpret the coefficient of labor (L)? C. Is it statistical significance at the 1 percent level of significance?
Suppose output (Q) is related to labor (L) and capital (K) in the following nonlinear way:
Q = aLbKc
When taking log to this equation, it is transformed into a linear
LnQ = lna + b ln(L) + c Ln (K)
One hundred twenty-three observations are used to obtain the following regression results:
|
Dependant Variable: |
Q |
R-square |
F-ratio |
p-value on F |
|
Observations: |
123 |
0.7547 |
184.56 |
0.00001 |
|
Variable |
Parameter Estimate |
Standard error |
t-ratio |
p-value |
|
Intercept |
5.5215 |
0.9750 |
5.66 |
0.0001 |
|
L |
0.650 |
0.2950 |
2.20 |
0.0295 |
|
K |
0.350 |
0.1450 |
2.41 |
0.0173 |
A. Write the regression equation based on the output either in the transformed linear form or the original non-linear form.
B. How do we interpret the coefficient of labor (L)?
C. Is it statistical significance at the 1 percent level of significance?
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