Answer to Question #316628 in Economics of Enterprise for given

Question

mathematically explain the interpretation of the log levels , levels log and log-log regression function

Answer 1

Hypothetical model is: ln(Y) = B₀ + B₁ ln(X₁) + B₂ ln(X_2 )

WithY = Wealth; X₁ = Income; X₂ = #money your wife spends 

Hypothetical outcome: ln(Y) = -7 + 3.7 ln(X1) - 0.85 ln(X2)

Now I understand that if X1 goes up by 1 percent my Y (= wealth) will go up by 3.7 percent.

• But where do you add that 3.7 percent to? What's your starting point?
• What is the interpretation of my intercept (-7)? 
• Since this is all in percentages how do I calculate the absolute value