Mathematics and Statistics Vol. 9(3), pp. 218 - 224
DOI: 10.13189/ms.2021.090302
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Two Observations in the Application of Logarithm Theory and their Implications for Economic Modeling and Analysis

Oluremi Davies Ogun ^*
Department of Economics, University of Ibadan, Ibadan, Nigeria

ABSTRACT

The contents of this paper apply to researches in the fields of economics, statistics – physical or life sciences, other social sciences, accounting and finance, business management and mathematics – core and applied. First, I discussed the misconception and the implications thereof, inherent in the conventional practice of entering interest rates as natural or untransformed series in data analysis most especially, regression models. The trends and variabilities of both transformed and untransformed interest rate series were shown to be similar thereby enhancing the likelihood of similar performances in regressions. By extension therefore, the indicated conventional practice unnecessarily and unjustifiably precluded elasticity inference on the coefficients of interest rates and summing up to procedural inefficiency as an independent computation of elasticity became the only available option. Percentages were not the equivalence of percentage changes and thus only series in growth terms hence, percentage changes should be spared log transformation. Secondly, the paper stressed the imperative to avoid unwieldy and theory incongruent expressions in post preliminary data analysis, by flagging the idea that regression models, in particular, of the growth varieties, should as much as practicable, sync with the dictates of modern time series econometrics in the specification of final equations.

KEYWORDS
Econometric and Statistical Methods, Econometric Modeling, Estimation, Methodological Issues

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Oluremi Davies Ogun , "Two Observations in the Application of Logarithm Theory and their Implications for Economic Modeling and Analysis," Mathematics and Statistics, Vol. 9, No. 3, pp. 218 - 224, 2021. DOI: 10.13189/ms.2021.090302.

(b). APA Format:
Oluremi Davies Ogun (2021). Two Observations in the Application of Logarithm Theory and their Implications for Economic Modeling and Analysis. Mathematics and Statistics, 9(3), 218 - 224. DOI: 10.13189/ms.2021.090302.