Econometrics doubt....HELP

[SoniaKapoor]

pls tell how did they get value of intercept as -.4947 and slope coeff as 1.0153 in eqn 8.7.14...pls explain

[kangkan]

thy must have calculated (GDP/labour) and (capital/labour) and run a regression..is this from gujrati?i rememeber thats what they did there

[Granpa Simpson]

Consider a CobbDouglas Production function Y=A*(K)^a*(L)^(1-a),
Log Y=:Log A+a*Log K+(1-a)*Log L+e.
or, Log Y-Log L=Log A+a*(Log K-Log L)+e.
Thus log (Y/L)=Log A+a*Log(K/L)+e
Hence to obtain the restricted R^2 what you have to do is to fit a regression of Log(Y/L) on Log(K/L) with intercept.

[SoniaKapoor]

Thanx Allen.Pls check my post on regression .Pls confirm the answer.

[mrittik]

great work Subhayu....hats off...

[Granpa Simpson]

Thanx Mrittick and Sonia..and Sonia for your query regarding the intercept term follow this discussion thread...
http://discussion-forum.2150183.n2.nabble.com/Regression-On-Standardized-Variable-td7591866.html#a7592908.