* Multicollinearity in OLS Model for Consumption Function * * Keywords: * regression, ols, linear, multicollinearity, us, consumption, function * * Description: * We illustrate how to estimate a linear OLS Model for Consumption * Function for the US and assess Multicollinearity in it * * Author(s): * Skif Pankov * * Source: * Damodar N. Gujarati and Dawn C. Porter, Basic Econometrics - 5th Edition * McGraw-Hill International Edition, Chapter 10, Example 10.2 (page 335) * sample 1 54 * Reading the datafile and naming variables read(data_10.2.shd) c yd w i * Generating a natural logarithms of variables genr lnc = log(c) genr lnyd = log(yd) genr lnw = log(w) * Running an OLS regression of lnc on lnyd, lnw and i, stating to include residual * statistics ols lnc lnyd lnw i / rstat stop