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Show That for the Following Regression Model Yt=eβ0+β1xd+uY _ { t } = e ^ { \beta _ { 0 } + \beta _ { 1 } x d + u }

Question 47

Essay

Show that for the following regression model Yt=eβ0+β1xd+uY _ { t } = e ^ { \beta _ { 0 } + \beta _ { 1 } x d + u }
where tt is a time trend, which takes on the values 1,2,,T,β11,2 , \ldots , T , \beta _ { 1 } represents the instantaneous ("continuous compounding") growth rate. Show how this rate is related to the proportionate rate of growth, which is calculated from the relationship
Yt=Y0×(1+g)tY _ { t } = Y _ { 0 } \times ( 1 + g ) ^ { t }
when time is measured in discrete intervals.

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