term 1 - non linear regression functions- revise this for week 3

Question 1

what is a non linear relationship between Y and X?

Answer 1

the effect on Y of a change in X depends on the value of X that is the marginal effect of X is not constant
a linear regression is mis specified
the estimator of the effect on Y of X is biased

Question 2

what is the solution to a non linear relationship between X and Y?

Answer 2

estimate a regression function that is non linear in X

Question 3

what are the assumptions of the general nonlinear population regression function?

Answer 3

1) E(u|x1i,X2i,…,Xki)=0
2)(X1i,….,Xki, Yi) are iid
3) big outliers are rare
4) no perfect multicollinearity