I have a simple question but I do not manage to be sure! I would be very grateful if you can confirm me! Do we have the possibility to estimate the following model : $$\frac{y}{x}= \alpha+\beta x+\varepsilon$$ Is there any problem because the endogeneous variable contains already the explanatory variable $x$? Thanks a lot!
2026-04-02 14:35:59.1775140559
Regression of y/x on x
29 Views Asked by Bumbble Comm https://math.techqa.club/user/bumbble-comm/detail At
1
As yumero commented, there is no problem from an algebraic point of view.
However, from a regression point of view, this is problematic since what is measured is $y$ and not $\frac y x$. I would definitely suggest that you set the regression as $$y= \alpha x+\beta x^2+\varepsilon$$ which is just a multilinear regression without intercept.
For sure, if the errors are marginal, this will not make much difference.