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In this post i would like to share with you how we should interpret results of our coefficients i mean to say should i use as unit in interpretation or percentage following examples will help us to understand this phenomena.
CASE 1! A CASE WHERE ALL VARIABLES IN LEVEL (WITHOUT LOG) FORM( LEVEL - LEVEL REGRESSION )
Suppose you have your two variables one is GDP which is dependent and second is inflation which is independent , so we will write following
gdp=β1(Inflation) ( suppose coefficient value of B1, means inflation coefficient value is .80)
Note: i don't add intercept and error term intentionally , so you can see here my first variable is without log and same independent variable also with out log
Note: you when you have your variables in level (without log) form you always interprets results in units like following interpretation will help you.
now see interpretation of case one as i have both of variables in non- log form so well interpret like if we increase one unit in inflation independent variable due to this change there will .80 units change in gdp dependent variables.
Now in this case we have two variables GDP and inflation GDP is dependent variable and inflation is independent variable and it necessary to not here that our dependent variable is in log form while independent variable is without log
Log gdp=β1(Inflation) ( suppose coefficient value of B1 mean inflation coefficient value is .80)
how to interprets ?
we will interpret if we increase one unit in inflation it will bring .80 percent change in gdp
CASE 3! A CASE WHERE WE HAVE DEPENDENT VARIABLE IN LEVEL(WITHOUT LOG FORM) AND INDEPENDENT VARIABLE IN LOG FORM (LEVEL -LOG REGRESSION)
In this case we have two variables gdp and inflation and gdp is our dependent variable and inflation is independent variable and dependent variable is without log and independent is in log form
gdp=β1(log-inflation) ( suppose coefficient value of B1 mean inflation coefficient value is .80)
how to interpret in this case
if we increase independent variable means log-inflation by 1 percent it will bring change .80 units in GDP
CASE 4! A CASE WHERE WE HAVE ALL VARIABLES IN LOG FORM EITHER DEPENDENT OR INDEPENDENT (LOG- LOG REGRESSION )
In this case we have both variables in log form and its simple interpretation like if we have following equation
loggdp=β1(log-inflation) ( suppose coefficient value of B1 mean inflation coefficient value is .80)
its i mean if we increase inflation by 1 percent it will bring .80 percent change in dependent variable which is gdp
It is acknowledge that main Idea is taken from econometric club supervised By Dr Anees
In this post i would like to share with you how we should interpret results of our coefficients i mean to say should i use as unit in interpretation or percentage following examples will help us to understand this phenomena.
CASE 1! A CASE WHERE ALL VARIABLES IN LEVEL (WITHOUT LOG) FORM( LEVEL - LEVEL REGRESSION )
Suppose you have your two variables one is GDP which is dependent and second is inflation which is independent , so we will write following
gdp=β1(Inflation) ( suppose coefficient value of B1, means inflation coefficient value is .80)
Note: i don't add intercept and error term intentionally , so you can see here my first variable is without log and same independent variable also with out log
Note: you when you have your variables in level (without log) form you always interprets results in units like following interpretation will help you.
now see interpretation of case one as i have both of variables in non- log form so well interpret like if we increase one unit in inflation independent variable due to this change there will .80 units change in gdp dependent variables.
Now in this case we have two variables GDP and inflation GDP is dependent variable and inflation is independent variable and it necessary to not here that our dependent variable is in log form while independent variable is without log
Log gdp=β1(Inflation) ( suppose coefficient value of B1 mean inflation coefficient value is .80)
how to interprets ?
we will interpret if we increase one unit in inflation it will bring .80 percent change in gdp
CASE 3! A CASE WHERE WE HAVE DEPENDENT VARIABLE IN LEVEL(WITHOUT LOG FORM) AND INDEPENDENT VARIABLE IN LOG FORM (LEVEL -LOG REGRESSION)
In this case we have two variables gdp and inflation and gdp is our dependent variable and inflation is independent variable and dependent variable is without log and independent is in log form
gdp=β1(log-inflation) ( suppose coefficient value of B1 mean inflation coefficient value is .80)
how to interpret in this case
if we increase independent variable means log-inflation by 1 percent it will bring change .80 units in GDP
CASE 4! A CASE WHERE WE HAVE ALL VARIABLES IN LOG FORM EITHER DEPENDENT OR INDEPENDENT (LOG- LOG REGRESSION )
In this case we have both variables in log form and its simple interpretation like if we have following equation
loggdp=β1(log-inflation) ( suppose coefficient value of B1 mean inflation coefficient value is .80)
its i mean if we increase inflation by 1 percent it will bring .80 percent change in dependent variable which is gdp
It is acknowledge that main Idea is taken from econometric club supervised By Dr Anees
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