2:Setting manual coefficients

[Pete Willemsen]

Hi Listers,

Y = β1+ β2*Area + β3Labor + β4*Fertilizer + u

This time its given that B4=3*B3.
Which model should you use? Give the estimates of B2, B3 and B4.

Thanks!

[Maarten Buis]

So you have a model:
Y = β1+ β2*Area + β3Labor + β4*Fertilizer + u

with the additional condition that β4 = 3*β3, so you can replace β4 with 3*β3

Y = β1+ β2*Area + β3Labor + 3*β3*Fertilizer + u

Y = β1+ β2*Area + β3 (Labor + 3*Fertilizer) + u

So you create a new variable containing Labor + 3*Fertilizer and add that to your model instead of Labor and Fertilizer

Alternatively, you could look at cnsreg (see: help cnsreg) which will produce the exact same results.