Use of LOG in regression Model

Conditions for use of log

1) No Log Model:
GDP = α + β FDI +β FLF +β INF + e
Variable Coefficient
C 1.252290
FDI 0.682627
FLF 0.131388
INF 0.077046

Interpretation:
GDP = 1.252290 + 0.682627 FDI + 0.131388 FLF + 0.077046 INF
 If FDI increase by 1 unit then GDP will increase by 0.682627 unit while
keeping other factor constant.
 If FLF increase by 1 unit then GDP will increase by 0.131388 unit while
keeping other factor constant.
 If INF increase by 1 unit then GDP will increase by 0.077046 unit while
keeping other factor constant.

2) Double Log / Log- Log Model:

Log (GDP) = α + β log (FDI) +β log
(FLF) +β log Variable Coefficient (INF) + e
C 0.624806
log (FDI) 0.115864
log (FLF) 0.367544
log (INF) -0.019632

Interpretation:
Log (GDP) = 0.624806 + 0.115864 log (FDI) + 0.367544 log (FLF) - 0.019632 log
(INF)
 If FDI increase by 1% then GDP will increase by 0.115864 % while keeping
other factor constant.
  If FLF increase by 1% then GDP will increase by 0.367544 % while keeping
other factor constant.
 If INF increase by 1% then GDP will decrease by 0.019632 % while keeping
other factor constant.

3) Semi Log / Log-Lin Model:

Log (GDP) = α + β FDI +β FLF +β
INF + e Variable Coefficient
C 1.047362
FDI 0.158824
FLF 0.018038
INF 0.013042

Interpretation:
Log (GDP) = 1.047362 + 0.158824 FDI + 0.018038 FLF + 0.013042 INF
 If FDI increase by 1 unit then GDP will increase by 0.158824 % while
keeping other factor constant.
 If FLF increase by 1unit then GDP will increase by 0.018038 % while
keeping other factor constant.
 If INF increase by 1unit then GDP will decrease by 0.013042 % while
keeping other factor constant.

4) Semi Log / Lin-Log Model:

GDP = α + β log (FDI) +β log
(FLF) +β log Variable Coefficient (INF) + e
C -3.584964
log (FDI) 0.523321
log (FLF) 2.954766
log (INF) -0.029517

Interpretation:
GDP = -3.584964 + 0.523321 log (FDI) + 2.954766 log (FLF) - 0.029517 log
(INF)
  If FDI increase by 1% then GDP will increase by 0.523321 unit while
keeping other factor constant.
 If FLF increase by 1% then GDP will increase by 2.954766 unit while
keeping other factor constant.
 If INF increase by 1% then GDP will decrease by 0.029517unit while
keeping other factor constant.

Appendix
1) No Log Model:
Dependent Variable: GDP
Method: Least Squares
Date: 12/01/23 Time: 19:32
Sample: 1996 2020
Included observations: 25

Variable Coefficient Std. Error t-Statistic Prob.

C 1.252290 1.786665 0.700910 0.4911

FDI 0.682627 0.549309 1.242702 0.2277
FLF 0.131388 0.067309 1.951997 0.0644
INF 0.077046 0.107344 0.717750 0.4808

R-squared 0.387069 Mean dependent var 5.756247

Adjusted R-squared 0.299507 S.D. dependent var 1.132301
S.E. of regression 0.947685 Akaike info criterion 2.876056
Sum squared resid 18.86023 Schwarz criterion 3.071077
Log likelihood -31.95071 Hannan-Quinn criter. 2.930147
F-statistic 4.420526 Durbin-Watson stat 1.573751
Prob(F-statistic) 0.014696
 2) Double Log / Log- Log Model:
Dependent Variable: LOG(GDP)
Method: Least Squares
Date: 12/01/23 Time: 20:38
Sample: 1996 2020
Included observations: 25

Variable Coefficient Std. Error t-Statistic Prob.

C 0.624806 1.212342 0.515371 0.6117

LOG(FDI) 0.115864 0.059080 1.961155 0.0633
LOG(FLF) 0.367544 0.352675 1.042159 0.3092
LOG(INF) -0.019632 0.115613 -0.169809 0.8668

R-squared 0.393977 Mean dependent var 1.730433

Adjusted R-squared 0.307402 S.D. dependent var 0.207391
S.E. of regression 0.172596 Akaike info criterion -0.530076
Sum squared resid 0.625579 Schwarz criterion -0.335056
Log likelihood 10.62595 Hannan-Quinn criter. -0.475986
F-statistic 4.550714 Durbin-Watson stat 1.581114
Prob(F-statistic) 0.013141

3) Semi Log / Log-Lin Model:

Dependent Variable: LOG(GDP)
Method: Least Squares
Date: 12/01/23 Time: 21:30
Sample: 1996 2020
Included observations: 25

Variable Coefficient Std. Error t-Statistic Prob.

C 1.047362 0.331371 3.160696 0.0047

FDI 0.158824 0.101880 1.558939 0.1340
FLF 0.018038 0.012484 1.444893 0.1632
INF 0.013042 0.019909 0.655080 0.5195

R-squared 0.371513 Mean dependent var 1.730433

Adjusted R-squared 0.281730 S.D. dependent var 0.207391
S.E. of regression 0.175766 Akaike info criterion -0.493680
Sum squared resid 0.648767 Schwarz criterion -0.298660
Log likelihood 10.17100 Hannan-Quinn criter. -0.439589
F-statistic 4.137866 Durbin-Watson stat 1.565507
Prob(F-statistic) 0.018805
 4) Semi Log / Lin-Log Model:
Dependent Variable: GDP
Method: Least Squares
Date: 12/01/23 Time: 21:12
Sample: 1996 2020
Included observations: 25

Variable Coefficient Std. Error t-Statistic Prob.

C -3.584964 6.555737 -0.546844 0.5903

LOG(FDI) 0.523321 0.319473 1.638079 0.1163
LOG(FLF) 2.954766 1.907090 1.549359 0.1362
LOG(INF) -0.029517 0.625178 -0.047214 0.9628

R-squared 0.405516 Mean dependent var 5.756247

Adjusted R-squared 0.320590 S.D. dependent var 1.132301
S.E. of regression 0.933314 Akaike info criterion 2.845497
Sum squared resid 18.29258 Schwarz criterion 3.040517
Log likelihood -31.56871 Hannan-Quinn criter. 2.899587
F-statistic 4.774922 Durbin-Watson stat 1.593322
Prob(F-statistic) 0.010866