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Questions › GATE › GATE 2024 › Q51
2 marks, −0.667Econometrics › Dummy variables and functional forms › Log, quadratic and other functional formsHardabout 4 min

GATE 2024 Question 51: Dummy variables and functional forms

The following table provides different statistical model specifications along with the elasticity of yty_tyt​ with respect to xtx_txt​. Which one of the following options is correct?

RowStatistical ModelElasticity
1yt=β1+β21xt+εty_t=\beta_1+\beta_2\dfrac1{x_t}+\varepsilon_tyt​=β1​+β2​xt​1​+εt​−β2xt2-\dfrac{\beta_2}{x_t^2}−xt2​β2​​
2yt=β1−β2ln⁡(xt)+εty_t=\beta_1-\beta_2\ln(x_t)+\varepsilon_tyt​=β1​−β2​ln(xt​)+εt​−β2xt-\dfrac{\beta_2}{x_t}−xt​β2​​
3ln⁡(yt)=β1+β2ln⁡(xt)+εt\ln(y_t)=\beta_1+\beta_2\ln(x_t)+\varepsilon_tln(yt​)=β1​+β2​ln(xt​)+εt​β2\beta_2β2​
4ln⁡(yt)=β1+β2xt+εt\ln(y_t)=\beta_1+\beta_2x_t+\varepsilon_tln(yt​)=β1​+β2​xt​+εt​β2xt\beta_2x_tβ2​xt​
5ln⁡(yt)=β1+β2ln⁡(xt)+εt\ln(y_t)=\beta_1+\beta_2\ln(x_t)+\varepsilon_tln(yt​)=β1​+β2​ln(xt​)+εt​β2exp⁡(xt)\beta_2\exp(x_t)β2​exp(xt​)
6ln⁡(yt)=β1+β2xt+εt\ln(y_t)=\beta_1+\beta_2x_t+\varepsilon_tln(yt​)=β1​+β2​xt​+εt​β21exp⁡(xt)\beta_2\dfrac1{\exp(x_t)}β2​exp(xt​)1​

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The following table provides different statistical model specifications along with the elasticity of yₜ with respect to xₜ. Which one of the following options is correct? | Row | Statistical Model | Elasticity | 1 | yₜ=β₁+β₂1/xₜ+εₜ | -β₂/xₜ² | 2 | yₜ=β₁-β₂ln (xₜ)+εₜ | -β₂/xₜ | 3 | ln (yₜ)=β₁+β₂ln (xₜ)+εₜ | β₂ | 4 | ln (yₜ)=β₁+β₂xₜ+εₜ | β₂xₜ | 5 | ln (yₜ)=β₁+β₂ln (xₜ)+εₜ | β₂exp (xₜ) | 6 | ln (yₜ)=β₁+β₂xₜ+εₜ | β₂1/(exp (xₜ)) | (A) Only rows 3 and 4 are correct (B) Only rows 1 and 2 are correct (C) Only rows 3 and 5 are correct (D) Only rows 4 and 6 are correct

Also written as: The following table provides different statistical model specifications along with the elasticity of y_t with respect to x_t. Which one of the following options is correct? | Row | Statistical Model | Elasticity | 1 | y_t=beta_1+beta_21/x_t+epsilon_t | -beta_2/x_t^2 | 2 | y_t=beta_1-beta_2ln (x_t)+epsilon_t | -beta_2/x_t | 3 | ln (y_t)=beta_1+beta_2ln (x_t)+epsilon_t | beta_2 | 4 | ln (y_t)=beta_1+beta_2x_t+epsilon_t | beta_2x_t | 5 | ln (y_t)=beta_1+beta_2ln (x_t)+epsilon_t | beta_2exp (x_t) | 6 | ln (y_t)=beta_1+beta_2x_t+epsilon_t | beta_21/(exp (x_t)) |

Dummy variables and functional forms has come up 20 times in 6 exams since 2011.

What this question tests

This question is on Log, quadratic and other functional forms, part of Dummy variables and functional forms in Econometrics.

Choosing and interpreting log-log, semi-log, quadratic and reciprocal specifications.

TestStop has 8 past-paper questions on this subtopic.

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