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  • Interpretation of coefficients for continuous variables using PPML

    Hello,

    I would like to make sure I understand how to interpret coefficients for continuous variables using PPML.
    I have the following results (dependent variable is migration, not logged):
    (1)
    log (Population origin) 0.8992***
    (19.873)
    log (Population destination) 0.7502***
    (12.958)
    log (Distance) 0.0473
    (0.661)
    Contiguity 0.5465***
    (5.631)
    Common language 1.2386***
    (11.444)
    log (X origin) -0.2745
    (-1.512)
    log (X destination) -0.5573***
    (-3.566)
    Would it be correct to say that a 1% increase in "X origin" is associated with a -0.2745% change in migration and, likewise, a 1% increase in "X destination" is associated with a -0.5573% change in migration? No transformations required?

    I'm a bit confused because https://en.wikipedia.org/wiki/Poisson_regression seems to imply a somewhat different interpretation, along the lines of, if "X origin" increases by a factor of e, then...

    Joao Santos Silva

    Thank you very much,
    Regards,
    Stan

  • #2
    Dear Stan Peterburgsky,

    Your interpretation is valid for small changes in the variables. Transformations are needed for discrete changes.

    Best wishes,

    Joao

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    • #3
      Thank you very much!
      I had a suspicion that, since this is non-linear, the slope of a tangent line is NOT what the Wikipedia article is referring to.

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