The lecture on functional forms explains that you may want to transform your data and estimate non-linear relationships.
This tutorial will show you how to do those transformations, but for more about the interpretations please refer to the chapter in Gujarati and the lecture PowerPoint slides.
We use the model of house price (measured in dollars) as a function of:
ROOMS: The average number of rooms in houses.
NOX: The amount of nitrogen oxide in the air in parts per million.
DIST: The distance of the community from employment centres in miles.
STRATIO: The average student-teacher ratio of schools in the community.
You now know how to estimate models and interpret the results. The rest of the course will be about tests to check whether the CLRM assumptions hold and the corrective steps that you need to take when they do not.
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