Comparing two r2s when dependent variables are different. Suppose you want to compare the r2 values of the growth model (5.19) with the linear trend model (5.23) of the consumer credit outstanding regressions given in the text. Proceed as follows:
a. Obtain In Yt, that is, the estimated log value of each observation from model (5.19).
b. Obtain the antilog values of the values obtained in (a).
c. Compute r2 between the values obtained in (b) and the actual y values using the definition of r2 given in Question 3.5.
d. This r2 value is comparable with the r2 value obtained from linear model (5.23).
Use the preceding steps to compare the r2 values of models (5.19) and (5.23).