### Abstract

Original language | English (US) |
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State | Published - 2018 |

### Fingerprint

### Keywords

- arcsinh JEL Classification Codes: C1
- C5 * We thank Jason Kerwin for useful suggestions All remaining errors are ours
- Elasticities
- Elasticity
- Inverse Hyperbolic Sine

### Cite this

*Elasticities and the Inverse Hyperbolic Sine Transformation*.

**Elasticities and the Inverse Hyperbolic Sine Transformation.** / Bellemare, Marc F; Wichman, Casey J.

Research output: Working paper

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TY - UNPB

T1 - Elasticities and the Inverse Hyperbolic Sine Transformation

AU - Bellemare, Marc F

AU - Wichman, Casey J

PY - 2018

Y1 - 2018

N2 - Applied econometricians frequently apply the inverse hyperbolic sine (i.e., arcsinh) transformation to a variable because it approximates the natural logarithm of that variable and allows retaining zero-valued observations. We provide derivations of elasticities in common applications of the inverse hyperbolic sine transformation and show empirically that the difference in elasticities driven by ad hoc transformations can be substantial. We conclude by offering practical guidance for applied researchers.

AB - Applied econometricians frequently apply the inverse hyperbolic sine (i.e., arcsinh) transformation to a variable because it approximates the natural logarithm of that variable and allows retaining zero-valued observations. We provide derivations of elasticities in common applications of the inverse hyperbolic sine transformation and show empirically that the difference in elasticities driven by ad hoc transformations can be substantial. We conclude by offering practical guidance for applied researchers.

KW - arcsinh JEL Classification Codes: C1

KW - C5 We thank Jason Kerwin for useful suggestions All remaining errors are ours

KW - Elasticities

KW - Elasticity

KW - Inverse Hyperbolic Sine

M3 - Working paper

BT - Elasticities and the Inverse Hyperbolic Sine Transformation

ER -