* HINT: * The program assumes that all files are stored in * C:\monographregression\computercode * change directory if code is located elsewhere * to store the figures a subfolder `figures' has to be * created clear cd C:\monographregression\computercode use "data\stata\rent99.dta" set scheme s1mono * Model rentsqm = beta_0 + beta_1*(1/area) + beta_2*yearc + epsilon gen areainv = 1/area regress rentsqm areainv yearc * Model rentsqm = beta_0 + beta_1*(1/area) + beta_2*yearc + beta_3*yearc^2 + beta_4*yearc^3 + epsilon gen yearc2 = yearc^2 gen yearc3 = yearc^3 regress rentsqm areainv yearc yearc2 yearc3 * Save the estimated coefficients matrix beta = e(b) * Calculate the estimated effect f2(year of construction) gen f_yearc = beta[1,2]*yearc + beta[1,3]*yearc2 +beta[1,4]*yearc3 * Plot the effect f2(year of construction) sort yearc graph twoway scatter f_yearc yearc , /* */ clc(. gs2 gs2) m(i) c(l) clpattern(l) lwidth(medthick) /* */ subtitle("(a) effect of year of construction", size(medium)) /* */ xtitle("year of construction", size(medium)) xsize(4.5) legend(off) /* */ ytitle("effect of year of construction ", size(medium)) xlab(1918(10)2000, labsize(medium)) ylab(, labsize(medium)) graph export figures\rentsqm_areainv_yearc_not_centered.eps , as(eps) replace * Model rentsqm = beta_0 + beta_1*(1/area) + beta_2*yearc + beta_3*yearc^2 + beta_4*yearc^3 + epsilon * yearc coded from 18 to 98 use "data\stata\rent99.dta" ,clear set scheme s1mono gen areainv = 1/area replace yearc = yearc-1900 gen yearc2 = yearc^2 gen yearc3 = yearc^3 regress rentsqm areainv yearc yearc2 yearc3 * Save the estimated coefficients matrix beta = e(b) * Calculate the estimated effect f2(year of construction) gen f_yearc = beta[1,2]*yearc + beta[1,3]*yearc2 +beta[1,4]*yearc3 * Plot the effect f2(year of construction) sort yearc graph twoway scatter f_yearc yearc , /* */ clc(. gs2 gs2) m(i) c(l) clpattern(l) lwidth(medthick) /* */ subtitle("(b) effect of year of construction, coded from 18 to 98", size(medium)) /* */ xtitle("year of construction", size(medium)) xsize(4.5) legend(off) /* */ ytitle("effect of year of construction ", size(medium)) xlab(18(10)98, labsize(medium)) ylab(, labsize(medium)) graph export figures\rentsqm_areainv_yearc_coded.eps , as(eps) replace * Model rentsqm = beta_0 + beta_1*(1/area) + beta_2*yearc + beta_3*yearc^2 + beta_4*yearc^3 + epsilon * with centered variables and orthogonal polynomials respectively use "data\stata\rent99.dta" ,clear set scheme s1mono gen areainvc = 1/area sum areainvc replace areainvc = areainvc-_result(3) orthpoly yearc , generate(yearco yearco2 yearco3) degree(3) regress rentsqm areainvc yearco yearco2 yearco3 * Save the estimated coefficients matrix beta = e(b) * Save the residuals predict res , res * Calculate the estimated effects f1(area) and f2(year of construction) gen f_area = beta[1,1]*areainvc gen f_yearc = beta[1,2]*yearco + beta[1,3]*yearco2 + beta[1,4]*yearco3 * Calculate the partial residuals gen partres = res + f_area gen partres2 = res + f_yearc * Plot the effect f1(area) graph twoway scatter partres f_area area , sort /* */ m(oh i) c(. l) clpattern(. l) lwidth(. medthick) mlcolor(gs7) msize(medlarge) /* */ subtitle("effect of area", size(medium)) /* */ xtitle("area in sqm", size(medium)) xsize(4.5) legend(off) /* */ ytitle("effect of area / partial residuals", size(medium)) xlab(20(20)160, labsize(medium)) ylab(, labsize(medium)) graph export figures\rentsqm_areainv_yearc3.eps , as(eps) replace * Plot the effect f2(year of construction) sort yearc graph twoway scatter partres2 f_yearc yearc , sort /* */ m(oh i) c(. l) clpattern(. l) lwidth(. medthick) mlcolor(gs7) msize(medlarge) /* */ subtitle("effect of year of construction", size(medium)) /* */ xtitle("year of construction", size(medium)) xsize(4.5) legend(off) /* */ ytitle("effect of year of construction / partial residuals", size(medium)) /* */ xlab(1918(10)1998, labsize(medium)) ylab(-10(5)10, labsize(medium)) graph export figures\rentsqm_areainv_yearc3_2.eps , as(eps) replace