Hi!
I am interesting in empirically testing the trade off between three indices. I have data for three indices -- Index1, Index 2 and Index 3. All of these range between 0 and 1. The idea is that increasing one index, say Index 1, should induce lower Index 2, or lower Index 3, or a combination of these two policy adjustments (a combination of lower Index 2 and lower Index 3). Hence, I need to test the validity of a linear tradeoff. I was thinking of a way to test that the weighted average of the three indices are equal to some constant. Could somebody please let me know if there is a procedure to do this or any other method to test the trade offs?.
Regards and Thanks
Abhijit
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