Dear list,
If the dependent variable is first-differenced (i.e, change in
unemployment -I'm using the d.variable command) and one would like to
control for the lagged dependent
variable on the right-hand side of the regression, should one lag the
"first-differenced variable" (i.e, lagged change in unemployment) or
should one lag the level variable (lagged unemployment -using the
time-series command l.variable). To be
clearer say you have:
d.unemployment = dependent variable
Should one use "l.unemployment" as the
Lagged DV in the right-hand side or should one lagged the
first-differenced variable?
thanks for clarifications
Carlos
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