I am running an OLS regression with 4 independent variables and two of the independent variables are non-linear with the dependent variable. The dependent variable is a percentage running from 0-100.
1.Is it better to transform the specific non linear indepedent variables into log or include a quadratic term?
- After the transformation of the variables should the residuals vs. fitted plot look more linear or is it okay to move forward even if the plot doesn't look that linear?
Thanks alot in advance