Measurement unit invariant coefficients in multiplicative-logarithmic functions

Abstract

It has been demonstrated that the coefficients of the non-multiplicative terms of a multiplicative-logarithmic function are dependent on the units used. In addition, Dickey-Fuller tests on the multiplicative terms are unit sensitive. It is demonstrated that a simple transformation circumvents these problems. It is still true that individual coefficients of logarithmic variables in such functions are meaningless and that the Dickey-Fuller test is disturbingly arbitary. However, the transformation appears to increase the meaningfulness of a technical change trend in a translog cost function. Show more