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Section 6 Functional Form and Nonlinearities - academic reed

Section 6 Functional Form and Nonlinearities - academic reed 2025

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This document discusses the concepts of functional form and nonlinearities in econometric models, emphasizing the differences between linear and nonlinear models in terms of parameter estimation. It explains how to handle nonlinearity in variables and parameters, the use of polynomial models, log-based models, interaction effects, and specification issues. The document also covers methods for estimating partial effects, testing for specification errors, and the challenges associated with nonlinear least squares estimation.

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