13: The Irposkml Procedure of Estimation

In the TRULS-1 model for Norway (Chapter 4), the general form of the accident frequency and casualty count equations is this:

Here, y_tr denotes the number of accidents or victims (of some kind) occurring in county r during month t. x_tri are independent variables, with Box-Cox parameters λ_xi and regression coefficients β_i, the u_tr’s are random disturbances, and a is the so-called Box-Tukey constant¹. In general, we set a = 0.1.

Thus, the dependent variable is Box-Tukey transformed, although with a Box-Cox parameter set to zero, yielding a logarithmic functional form. The independent variables may, in principle, all be Box-Cox-transformed, although the Box-Cox parameters need not all be different from each other.