3.8 — Polynomial Regression — Class Notes


Tuesday, November 3, 2020


This week we will cover non-linear models, which we anticipated last week with an interaction effect between two continuous variables: \(X_1 \times X_2\), where the marginal effect of \(X_1 \rightarrow Y\) is dependent on the value of \(X_2\).

We cover two types of nonlinear models. Today, we cover polynomial models, where we include higher-order \(X\) variables to explain a non-linear effect. Next class we will cover logarithmic models, which are more frequently used — as well as a few final tests and transformations for multivariate regression before we turn to panel data (Unit IV) next week.

Today, we will spend the first half of class finishing last class’ practice problems (on dummy variables and interaction effects), then I will cover polynomial models. After we finish next class’ lecture, we will do another set of R practice problems, and you will be given your final graded HW 5 to work on this material.


See today’s suggested readings.


Practice Problems

Today I will give you some time to work on last class’ practice problems (on dummies and interaction effects). Answers will be posted on that page later.

Assignments: Problem Set 5 (Due Sun Nov 8)

Homework 5 (on 3.1-3.5) is due by 11:59 PM Sunday November 8. This is likely your final graded homeworkIn the past, I have always released a HW 6 on Imperfect Competition just for practice for the Final Exam.

Live Class Session on Zoom

The live class Zoom meeting link can be found on Blackboard (see LIVE ZOOM MEETINGS on the left navigation menu), starting at 11:30 AM.

If you are unable to join today’s live session, or if you want to review, you can find the recording stored on Blackboard via Panopto (see Class Recordings on the left navigation menu).