In this article, we will follow Woolridge (2002) procedure to estimate a set of equations with nonlinear functional forms for panel data using the two-stage least squares estimator. It has to be mentioned that this topic is quite uncommon and not used a lot in applied econometrics, this is due that instrumenting the nonlinear terms […]
When we start to analyze any type of economic relationship, it is often said that we always need to graph the data. The importance of this step is having a visual where we can increase the understanding of our current relationships in the data. Sometimes with this, we can improve the mathematical functional form in
Identifying Patterns with Stata Graphs Read More »
While modelling specific phenomenon’s in economics, sometimes we might encounter a functional form which may not be linear in the explanatory variables. Assuming, that we still have linearity in the estimators, we have the capability to include in the regression, variables with powers. As an example, consider the following model: The last equation presents the
Investigating Non-linear relationships with curvefit using Stata Read More »
