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September 27, 2007
Elasticities, Logs, and Functional Form
The definitions of elasticity:
A candidate production function:
Another candidate:
Which do economists prefer? Well, economists like to think about elasticities. For a linear model, the elasticity is not constant.
For a log-log model, elasticities are constant (and easier to see).
Posted by bparke at September 27, 2007 09:06 AM