Hi,

`I am estimating a SVAR, between three variables real per capita
``government spending, real per capita tax revenues and real per capita
``income.
``The variables are transformed in logs. Actually, i am trying to
``reproduce the results in Blanchard and Perotti (2002). I will try to
``describe shortly what i do and what i need.
`
my variables are gdp, gov and tax (quarterly data)
Var specification is: X(t)=A0+A(L)X(t-1)+dummy+trend + U

`In the first step I estimated a var with four lags a dummy variable
``linear trend. So I used this command
`
var tax gov gdp, lags(1/4) exog( trend dummy)

`i get the residuals from each equation. By the way, I could not find a
``command to get the residuals from each equation, simultaneously, after
``the var. So i run OLS for each equation and use:
`
predict e, residuals (for example I name the residuals as: u_t, u_g, u_y)
The identification as the authors say is as follows
u_t=a1*u_y + a2*e_g + e_t (1)
u_g=b1*u_y + b2*e_t +e_g (2)
u_y=c1*u_t + c2*u_g +e_y (3)

`Where e_ denotes the structural shocks that need to be recovered. The
``restrictions are, b1=0, a1=2.08 and b2=0.
``Then they construct the following two variables after the above
``restrictions
`
T=u_t - 2.08*u_y (4)
G= u_g (5)

`The authors write: "we use T and G as instruments to estimate c1 and c2
``in a regression of u_y on u_t and u_g". So what i do is the following
`
ivregress 2sls u_y (u_t u_g = T G)

`My first question is whether the above IV regression is the correct one
``to express what the authors say. I am saying this because i receive an
``error in STATA, although if i understood correctly the endogenous
``variables here should be u_t u_g
`

`My second problem now is the following. Assume that someone here helped
``me with the above step and i have estimated c1 and c2, then is still
``missing the estimation of a2. So what i was planning to do is to have
``the svar estimation with the usual set up, i.e:
`
matrix A =
matrix B =
svar tax gov gdp, lags (1/4) exog (dummy trend) aeg(A) beq(B)

`However, I need to make a rescaling or transformation for the whole
``estimated coefficients including the coefficients for the impulse response.
``Since the variables are in logs i need to make a rescaling to denote
``multipliers, i.e dollar per dollar change. The authors do not say how
``they do the transformation but i guess they divide by the mean of the
``ratio y/g and y/t to recover the spending and tax multiplier respectively.
`

`My next question is how to do this rescaling for impulse responses so
``as, instead of the 1% deviation to have the 1 unit dollar increase and
``therefore get the multipliers at each quarter.
`

`Can you please help me. I will also appreciate whether there is any code
``and welcome any suggestions or corrections to what I did.
`
Looking forward for your reply.
Kind regards
Safis
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