PPML model

[Kien Nguyen Quang]

Hi everybody, i am having trouble in interpreting the results from the coefficient in the PPML model that my teacher provided me. Can anyone help me in how to explain and interpret the result of the regression please and how to write the correct equation from stata that my teacher provided

Thanks in advance

[Joao Santos Silva]

Dear Kien Nguyen Quang,

The model has the form y = exp(x'b) + u and the interpretation of the coefficients is exactly as in a model where the dependent variable is in logs.

Best wishes,

Joao

[Kien Nguyen Quang]

Dear Mr. Joao

Thanks you so much for your answer but can you be more specific in the way i have to interpret these coefficient like for example: lngdp coef is 1.24 so it means if lngdp increase 1% , trade egs will also increase 1.24% right? and the same is for flfpr 0.03 means the same?

only the lngdp lndist is in log while the others is not

Best regards,

Kien

[Joao Santos Silva]

Dear Kien Nguyen Quang,

If GDP (not log GDP) increases by 1%, the expected value of the dependent variable increases by 1.24%. For the dummies, for example, changing RTA from 0 to 1 will increases the expected value of the dependent variable by 100(exp(0.673)-1)% = 96.1%.

Best wishes,

Joao

[Kien Nguyen Quang]

Dear Mr. Joao

Thanks for the clarification, so it means that if the dependent variable is not in log, the independent one (not in log) will have to be interpret 100(exp(coef)-1)%, and the independent variable in log do not have to change right?

Many thanks for your excellent assistance and key contributions in this forum

Best regards,

Kien