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An equation may be nonlinear in the variables. However, linear regression analysis (OLS) can be applied...

An equation may be nonlinear in the variables. However, linear regression analysis (OLS) can be applied to a nonlinear equation if a certain condition is met. What is this special condition?

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OLS (Ordinary Least Squares) can be applied to any model or relationship as long as the equation is LINEAR IN PARAMETERS or Can be transformed such that the transformed model is Linear in Parameters. This is the special condition which needs to be met so as to apply Linear Regression Analysis to a nonlinear relationship between dependent and independent variable. The equation can be non linear in Variables but has to be linear in parameters or there should exist a transformation such that the transformed relation becomes linear in parameters.

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