Interpret the following regression equation together with all the supporting statistics where Yt is the number of new cars sold (millions of units), X1t is the disposable income of consumers ($B), X2t is the price of a new car (an index number where 1982-84=100), and X3t is the 5-year Treasury Bond rate (%). The values reported in parenthesis directly below the regression coefficients are the t-calculated values for the respective coefficients.

Fcal = 25.98

R2 = .58

Yt=.002 + .005X1t - .025X2t - .125X3t n=28 (1956-84)

(4.12) (5.23) (-1.51) (-2.65)

Assume that the model was re-estimated in its double logarithmic form and the results read:

Fcal = 30.28

R2 = .62

lnYt=.002 + 1.4 5lnX1t - .75lnX2t - 1.10lnX3t n=28

(3.12) (4.33) (-2.21) (-1.65)

Interpret this model and relate to the concept of elasticity. Write the model in its exponential format with the relevant coefficients.