 Don’t use command sum for dummy variables

 Sum can go with if or by

o +-*/
o >=,<=
o |(or)
o &(and)
o !=(unequal)
o After if, we use ==
 Tab provides disttribution of values of variables so that we can understand the
structure of the dataset
 Histogram educ, normal
 Gen: to generate new variable
o Gen newvar=
o Gen educsq=educ^2
 Drop: delete variable
 Label variable + name + “..”
 Gen … if/ Replace …. If
 List in/if
o Sort wage
o List wage in 1/10
o List wage in 517/526
 Drop/keep in/if
o Drop variable
o Drop in 1/20
 Rename
o Rename var newname
o Rename educ hocvan
Step 5: Estimate the model
 Econometrics model: linear regression model (data set is cross sectional and
dependent variable is quantitative and continous)
 Methods to estimate coefficients: OLS
 Check the correlation of X and Y
o Corr Y X -> correlation matrix
o Corr wage educ exper
 Correlation matrix presents
o Correlation between X and Y -> r(X,Y). If r(Y,X) #0 _> has correlation can
include
o Example:
 r(wage, educ)>0 education has positive correlation with wage -> educ
should be included in the model.
 R(wage, nonwhite)<0 -> race has negative corr with wage implying
that nonwhite ppl tends to have lower wage than white ppl.
 r(wage, female)<0 ->gender has corr with wage. Female tends to have
lower wage than male o average
 Conclusion: all the independent variables have correlation with the dependent
variable -> we can include them in the model.
 Note: Choosing Y and X
Topic 1: Analyse the impact of foreign direct investment on GDP growth of Vietnam
Y: GDP growth
X1: FDI (main independent variable)
X2, X3, …, Xk: Control variable

Topic 2: Analyse the relationship between FDI and GDP growth of Vietnam
(1): GDP Growth – f(FDI, X1 )
(2): FDI – f(GDP Growth, X2 )

Topic 3: Analyze the relationship between the rice output and the rainfall of Vietnam
Rice Output (Y), Rainfall (X)

If we have two var A and B and we want to see if A and B can be X and Y we have to
check the nature of corr between A and B
Calculate the corr
If r(A,B)#0 -> can include in the model
If correlate check if it is causation or not
If causation:
Result/consequence: Y
Cause: X