Question: Try logs. The data file for Table 11.2 contains the logarithms of each variable. The logarithm transformation pulls in the long tail of a skewed
Try logs. The data file for Table 11.2 contains the logarithms of each variable.
The logarithm transformation pulls in the long tail of a skewed distribution. It is common to use logarithms to make economic and financial data more symmetric before doing inference. Find the correlations and generate scatterplots for each pair of transformed variables. Interpret the results and then compare with your analysis of the original variables.
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