Functional forms have been used so far to model various situations. - In simple linear regression models, the equation consists of YT equals beta 1 plus beta 2 XT plus UT. - However, in certain situations, we need to consider different functional forms. - For example, if we have the model log of YT equals beta 1 plus beta 2 XT plus UT, it is called a log-linear model. - Another functional form is the Lin-log model, where the equation is YT equals beta 1 plus beta 2 log of XT plus UT. - Furthermore, we have the log-log model, which is represented by log of YT equals beta 1 plus beta 2 log of XT plus UT. - A reciprocal model is expressed as YT equals beta 1 plus beta 2 1 upon XT plus UT. - Lastly, polynomial models involve additional terms, such as beta 3 XT square plus beta 4 XT XT minus 1 plus UT. - This chapter will delve into these different functional forms and their applications. - These models are utilized to examine elasticity, which we will discuss in the next recording.
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