# Re: st: Two stage least squares

 From Austin Nichols To statalist@hsphsun2.harvard.edu Subject Re: st: Two stage least squares Date Mon, 20 Jul 2009 10:26:13 -0400

```Susaeta , Andres <asusaeta@ufl.edu> :

g double x1_y2=x1/y2
g double x2_y2=x2/y2
g double x4_y1=x4/y1
ivreg2 y1 (x1_y2 x2_y2 = x1 x2 x3 x4), gmm robust
ivreg2 y2 x3 (x4_y1 = x1 x2 x4), gmm robust

On Sun, Jul 19, 2009 at 2:46 PM, Susaeta ,Andres<asusaeta@ufl.edu> wrote:
> Dear statalist:
>
> I have a supply and demand equations which are not linear in the
> variables. We have two troublesome variables: y1 and y2 are
> endogenous. I want to perform a 2SLS or 3SLs but the endogenous
> variables are dividing other variables. I tried to use ivreg or
> reg3 but Stata doesn't allow me to do it. I guess Stata (when
> programming) doesn't allow to include variables multiplying
> others. Any suggestions?
>
> y1= a0 + a1*(x1/y2)^0.5 + a2*(x2/y2)^0.5
>
> y2= b0 + b1*x3 + b3*(x4/y1)^0.5
>
> thank you very much!
>
> Susaeta Larrain,Andres
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