Semilog Transformation

Abstract

In business and economic series it is often true that a constant rate of growth prevails. This can happen with the sales of a company, GNP, consumption patterns, etc. For example, if the growth in GNP is 5% a year, it implies a compounded yearly rate of growth of 5%, a pattern that is exponential. Table 6-4 shows the revenues of an antipollution company (Lanard) which follows a typical exponential pattern of growth. (These data are graphed in Figure 6-1.) Regression can be used to estimate a forecasting equation for this nonlinear pattern and to find the exact rate of growth.