# Re: st: How -ovtest- works?

 From Andreas Kuhn To statalist@hsphsun2.harvard.edu Subject Re: st: How -ovtest- works? Date Wed, 09 Jun 2004 19:04:00 +0200

```UENOHARA Hideaki wrote:
```
```Dear all,

I want to know how -ovtest- works.

In my understanding, the RESET procedure is as follows:
1. regress Y on X_1, ... ,X_k, and obtain Yhat.
2. calculate Yhat^2 and Yhat^3.
3. regress Y on X_1, ... ,X_k, and Yhat^2, Yhat^3.
4. test the null that Yhat^2 = Yhat^3 = 0.

But in Stata, -ovtest- does not seem to be identical to this procedure,
as the example below shows.
Does anyone know how -ovtest- is working in Stata?

---
. sysuse auto
. reg price mpg weight foreign
. predict y
. gen y2=y^2
. gen y3=y^3
. reg price mpg weight foreign y2 y3
. test y2 y3

( 1)  y2 = 0
( 2)  y3 = 0
Constraint 2 dropped

F(  1,    68) =    3.90
Prob > F =    0.0523

. quietly reg price mpg weight foreign
. ovtest

Ramsey RESET test using powers of the fitted values of price
Ho:  model has no omitted variables
F(3, 67) =     15.31
Prob > F =      0.0000
---

UENOHARA Hideaki, LL.M. <uhideaki@td6.so-net.ne.jp>
Doctoral Student, Graduate School of Law and Politics,
The University of Tokyo

*
*   For searches and help try:
*   http://www.stata.com/support/faqs/res/findit.html
*   http://www.stata.com/support/statalist/faq
*   http://www.ats.ucla.edu/stat/stata/

```
- ovtest - also includes the fourth power of yhat as a regressor. thus, including yhat^4 in your regression should give the same result as ovtest.

andreas

*
* For searches and help try:
* http://www.stata.com/support/faqs/res/findit.html
* http://www.stata.com/support/statalist/faq
* http://www.ats.ucla.edu/stat/stata/