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Testing coefficients sum to 1

  • 04-11-2011 7:03pm
    #1
    larry low
    Closed Accounts Posts: 7 ✭


    I have run a regression like this
    Ln(total cost) = x0 (x1)ln(price of labour) + (x2)ln(rent) + (x3)ln(price of raw matirals) etc

    I was looking as to how to formally perform a test that the coefficents on the explainatary variables sum to one (ie x1 + x2 + x3 ...... =1)
    I know i can just use the test command in stata, but I was looking to run a restricted regression and compare its explaiatary power to that of the unrestricted model.

    Any help would be greatly appreciated


Comments

  • #2
    andrew
    Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 3,372 Mod ✭✭✭✭andrew


    larry low wrote: »
    I have run a regression like this
    Ln(total cost) = x0 (x1)ln(price of labour) + (x2)ln(rent) + (x3)ln(price of raw matirals) etc

    I was looking as to how to formally perform a test that the coefficents on the explainatary variables sum to one (ie x1 + x2 + x3 ...... =1)
    I know i can just use the test command in stata, but I was looking to run a restricted regression and compare its explaiatary power to that of the unrestricted model.

    Any help would be greatly appreciated

    My econometrics is a bit rusty (not that it was ever...shiny), but why would it matter if the coefficients sum to one? Wouldn't you just use an F test to compare the two different models you're testing?


  • #3
    larry low
    Closed Accounts Posts: 7 ✭larry low


    andrew wrote: »
    My econometrics is a bit rusty (not that it was ever...shiny), but why would it matter if the coefficients sum to one? Wouldn't you just use an F test to compare the two different models you're testing?

    If you were looking at whether or not the cost would increase by 10% if the cost of inputs rose by 10% all individually


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