On Thu, 29 Jun 2006, Ryan J. Pieszak wrote: I'm not quite sure I understand the question but I'll try. In gretl's NLS you, the user, have to specify the nonlinear function that you believe may be generating the data. For example, is a nonlinear consumption function that William Greene put forward as a possible generalization of the "simple textbook" version C = alpha + beta * Y How do you come up with such functions? Basically, either you find them suggested in the economics literature, or you invent them yourself based on your knowledge of general economic theory and your intuition. There are some programs available (e.g. genetic algorithms) where you can throw in a dependent variable and a mess of independent variables, and ask the program to figure out how they are related, if at all. Gretl's NLS is not like that: you supply a structure and gretl figures out the optimal parameter values. That's really just a matter of mathematical perception. In relation to Greene's function above, you can see that if gamma = 1 it reduces to a linear relationship between C and Y, so we might try starting with gamma = 1. In general, we ask: is there some parameter in this function such that, if we set it to 1 or 0 or something, the function collapses to a linear one? Allin Cottrell