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Re: st: Polynomial OLS


From   "Ángel Rodríguez Laso" <angelrlaso@gmail.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: Polynomial OLS
Date   Fri, 26 Dec 2008 11:41:24 +0100

I didn't know that taking logarithms would mitigate multicolinearity.
Another possibility to achieve this without hampering interpretation
of coefficients is centering the original variable, i.e. substracting
the mean, before squaring and cubing it.

Angel Rodriguez-Laso

2008/12/25 Claude Francoeur <claude.francoeur@hec.ca>:
> Hello,
>
> We are doing a polynomial OLS. An explanatory term is squared and cubed to
> account for non linearity of the association with the dependent variable. We
> also took the natural log of these variables to mitigate multicolinearity.
> We are getting significant coefficients. Our regression looks like this :  Y
> = ln(X)  ln(Xsquared)  ln(Xcubed) and control variables. Is our approach
> valid?
>
> Thanks for your help.
>
> Claude
>
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