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st: A Question on Simulating S.E of the Elasticities

From   Asgar Khademvatani <>
Subject   st: A Question on Simulating S.E of the Elasticities
Date   Fri, 07 Dec 2007 23:27:09 -0700

Dear All,

Basically, I have estimated a system of the cost and labor-share equation using ISURE. I am using time-series of a particular U.S. industry stretched over 1958-2000 for 43 years. Then I have generated a variable called "sve_sg" as this new variable is a function of all RHS variables of the cost function. Then, I have generated the elasticities of this new defined variable "sve_sg" with respect to each factor as it is function of that factor. For example, If I would like to calculate its elasticity with respect to the factor"l" , in doing so, the first, I generate this elasticity, named, "Isvl_sr_sg" as you see in the following. so that this generated elasticity is a function of some variables that each are as function of the estimated coefficients and RHS variables of the cost function. I have include all of these variables in the following.

Isvl_sr_sg = (d2cel_sg)*((pl_sg)/(sve_sg))

d2cel_sg = ((pvc_sg)*(_b[lple_sg]+(sve_sghat*sl_sghat)))/((pl_sg)*(e_sg))

sve_sg = (sve_sghat)*(pvc_sg / e_sg)

sl_sghat = _b[lpl_sg] + _b[lple_sg]*le_sg + _b[lplk_sg]*lk_sg + _b[lplt_sg]*t

sve_sghat =_b[le_sg] + _b[lple_sg]*lpl_sg + _b[lpme_sg]*lpm_sg + _b[lek_neg_sg]*lk_sg + _b[let_sg]*t

pvc_sg = (exp(_b[_cons] + _b[lq_sg]*lq_sg + _b[lpl_sg]*lpl_sg + _b[lpm_sg]*lpm_sg + _b[lk_sg]*lk_sg +_b[le_sg]*le_sg + _b[t]*t + _b[lple_sg]*lple_sg + _b[lplk_sg]*lplk_sg + _b[lpme_sg]*lpme_sg + _b[lpmk_sg]*lpmk_sg + _b[lek_neg_sg]*lek_neg_sg + _b[lplt_sg]*lplt_sg + _b[lpmt_sg]*lpmt_sg + _b[let_sg]*let_sg + _b[lkt_sg]*lkt_sg))

My target is simulating the standard errors(S.E) of such elasticity over 43 years. To do so, my procedure is that I initially re-run the ISURE model and then I am using the following "testnl" command as follows:

est replay "ISURE"
testnl [=lvc_sg]: Isvl_sr_sg // lvc_sg is the cost function.

But, after runnign my .do file, I am getting the following error. Can anybody help me out that what is wrong with using "testnl" command?

testnl [=lvc_sg]: Isvl_sr_sg

(1) [ = lvc_sg]: Isvl_sr_sg
equation [-(lvc_sg] not found

end of do-file

I am not sure whether this procedure to simulate S.E of the Isvl_sr_sg is correct or not. If not so, anybody please can help me on this matter, how to calculate the S.E though any other way?

Thank you

Asgar Kh.
University of Calgary-Canada

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