Heteroskedasticity-robust elasticities in logarithmic and two-part models
AbstractLogarithmic models are widely used to study highly skewed positive outcomes, either alone or in combination with an equation that first distinguishes between zero and nonzero values (the two-part model). A well-known drawback of such models is that to obtain marginal effects that pertain to the arithmetic mean, rather than the mean of logs, we must exponentiate, and this retransformation is complicated in the presence of heteroskedasticity. This article presents a simple method for correcting estimated elasticities for the effects of heteroskedasticity, in both log-linear and log-log (constant elasticity) equations. An example, drawing on Bulgarian farm survey data, demonstrates that this correction leads to significantly different estimates of the elasticity of expenditures on agricultural inputs with respect to land area and the age of the household head.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Applied Economics Letters.
Volume (Year): 17 (2010)
Issue (Month): 3 ()
Contact details of provider:
Web page: http://www.tandf.co.uk/journals/routledge/13504851.html
Other versions of this item:
- Tom Hertz, 2007. "Heteroskedasticity-Robust Elasticities in Logarithmic and Two-Part Models," Working Papers 2007-19, American University, Department of Economics.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Toni Mora & Joan Gil & Antoni Sicras-Mainar, 2012.
"The influence of BMI, obesity and overweight on medical costs: a panel data approach,"
2012/37, Institut d'Economia de Barcelona (IEB).
- Toni Mora & Joan Gil & Antoni Sicras-Mainar, 2012. "The Influence of BMI, Obesity and Overweight on Medical Costs: A Panel Data Approach," Working Papers 2012-08, FEDEA.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.