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From |
"Joseph Coveney" <jcoveney@bigplanet.com> |

To |
"Statalist" <statalist@hsphsun2.harvard.edu> |

Subject |
Re: st: Decreasing Returns to SCALE |

Date |
Tue, 20 May 2008 09:19:31 +0900 |

Altay Turk wrote: How can I test for decreasing returns to scale? Suppose I ran the regression: log_y = a+b(logx)+c(logz) I'd like to test b+c<1 -------------------------------------------------------------------------------- My guess is that you'd logarithmically transform your variables, perform ordinary least-squares linear regression, calculate the one-sided 95% confidence interval of the linear combination of the two slope regression coefficients and inspect whether the upper confidence limit exceeds one. Joseph Coveney clear * set more off set seed `=date("2008-05-20", "YMD")' set obs 25 generate float y = exp(invnormal(uniform())) generate float x = uniform() generate float z = uniform() * * Begin here * foreach var of varlist y x z { generate float log_`var' = ln(`var') } regress log_y log_x log_z // Below, is the UCL < 1? lincom _b[log_x] + _b[log_z], level(90) exit * * 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/

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