Re: AW: st: prgen option quadratic term

[Daniel Feenberg <feenberg@nber.org>]

> On Wed, Nov 7, 2012 at 10:35 AM, Meulemann  Max <mmeulemann@ethz.ch> wrote:
> > thx, the margins and marginsplot function helped a lot.
> >
> > Anyways anybody got a idea how I am to interpret my data here: I find a 
> > negativ linear term for capitagdp, but if i include a quadratic gdp 
> > term, that one turns out to be positiv and significant with a lrtest.

If you rerun your regression, but replace gpd*^2 with the square of gdp 
less mean gdp, then you have basically the same model and standard errors, 
but the coefficient on the squared term will have no influence on the 
dependent variable at the mean gdp. So you have an easy interpretation of 
the linear term - it is the effect at the mean gdp. The sign of the 
quadratic coeficient then tells you if the effect grows or shrinks for gdp 
larger or smaller than the mean and it is easy to see how intense that 
effect will be. The other coeficients will be unaffected.

dan feenberg
NBER
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