# Log-lin model in simple regression: yi=B0.B1Xi.eui take natural log of both sides lnyi=lnB0 + (lnB1)xi +…

Log-lin model in simple regression:

yi=B0.B1Xi.eui

take natural log of both sides

lnyi=lnB0 + (lnB1)xi +

ui . Take lnyi = wi,

lnB0= B*0 and

lnB1=B*1 so the former equation

equals to wi= B*0 +

B*1 + ui. It is said that, when

you increase x by 1 unit, you expect B*1 %

change in y.

B*1

=(dyi/yi) / dxi =

= (((yi-yi-1)/yi) /

(xi- xi-1))*100 . question is about the

numerator, (yi-yi-1)/yi)*100:

1)It is said that the numerator reflects the percentage change

in y, then why it is not

((yi-yi-1)/yi-1) but instead

((yi-yi-1)/yi) ? Why don’t we

divide by yi-1 (the value before i-th term,or the past

value) instead of yi (the i-th term, or the current

value) ?

2) Does ((yi-yi-1)/yi)*100

really stand for the percentage change in y?