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Re: st: AW: HELP on xtabond2


From   delhawary@worldbank.org
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: AW: HELP on xtabond2
Date   Wed, 25 May 2005 15:37:20 -0400

Hi Niko,
Thank you for your message.

I am treating the cash flow and sales ratio as endogenous cause I am including
their contemporrenous values in the estimation equation. So, while the Cash flow
ratio at time t affects the firm's investment ratio at time t, it could be also
the case that invetsment at time t is affceting the cash flow at time t .

So there is a potential problem of reverse causality. Same applies to sales
ratio.

Thanks, Dahlia

Dahlia Anwar El- Hawary
Consultant
Financial Sector Operations and Policy Department
World Bank
Tel: 202 473 5238
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