/*This do file generates the Tables and Figures found in Chapter 2 of the
text book XXXX
*/
*Begin by loading in the data Chapter 1 - Example 1
xxx
*Generate the log of consumption and income
gen ln_i=ln(i)
gen ln_c=ln(c)
*Label teh variables
label variable ln_i "Log of Income"
label variable ln_c "Log of Consumption"
*Generate a scatter plot of the variables
scatter ln_c ln_i
*Generate a scatter plot with a linear line of best fit.
twoway (scatter ln_c ln_i) (lfit ln_c ln_i)
/*Run the regression with ln_c as the dependent variable and ln_i as the
independent variable.
*/
regress ln_c ln_i
*Generate c_bar and c_hat
egen c_bar=mean(ln_c)
predict c_hat, xb
*Generate the error term
predict e, resid