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From |
Kit Baum <baum@bc.edu> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
st: re: How to determine the total effect of two opposed effects? |

Date |
Sun, 20 Sep 2009 07:25:01 -0400 |

<> Christian said among all independent variables in a regression analysis there are two highly correlated ones (logmarketcap (firm size) and logstockmarket (size of a stock market of the country a firm is located in). Both variables correlate by 0.5. My hypothesis is that both variables have a negative effect on the dependent variable. To cope with the high correlation I created a interaction effect of the two variables and included the interaction effect in the regression. All three variables (logmarketcap, logstockmarket, and interaction effect) are significant in the regression output, however with varying signs of the coefficients (positive for logstockmarket and logmarketsize, negative for the interaction effect). However, I am now wondering what's the total effect? is it negative, or positive? How can I evaluate this question for both variables logstockmarket and logmarketcap?

sysuse auto, clear g wl = weight*length reg price weight length wl su length if e(sample), mean local mul `r(mean)' su weight if e(sample), mean local muw `r(mean)' // d price / d weight at mean length lincom weight + `mul' * wl // d price / d length at mean weight lincom length + `muw' * wl

KIt Kit Baum | Boston College Economics & DIW Berlin | http://ideas.repec.org/e/pba1.html

An Introduction to Modern Econometrics Using Stata | http://www.stata-press.com/books/imeus.html * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**st: RE: re: How to determine the total effect of two opposed effects?***From:*"Martin Weiss" <martin.weiss1@gmx.de>

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