In the quadratic trend model, y_t = β₀ + β₁t ² + ε_t, which coefficient determines if the trend is going to be U-shaped or inverted U-shaped?

Name: In the quadratic trend model, y t = β 0 + β 1 t 2 + ε t , which coefficient determines if the trend is going to be U-shaped or inverted U-shaped?
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Question

Quizplus · Accepted Answer

The coefficient β12 determines the curvature of the trend. If β12 is positive, the trend is U-shaped, and if β12 is negative, the trend is inverted U-shaped.

In the Quadratic Trend Model, Yt = β0 + β1t

In the Quadratic Trend Model, Y_t = β₀ + β₁t