I'm trying to estimate the elasticity between debt and interest rate for different values of interest. I am using a time series dataset.
I made a categorical variable for interest so that I can group the observations when running my regressions as I am interested in the elasticity between debt and interest rate for certain groups of observations.
My first option: using a log-log model
reg lnDebt lnInterest + control variables if categorical_variable_for_interest==1
My second option is
xi: reg Debt Interest + control variables margins eyex(Interest) over(categorical_variable_for_interest)
I get different estimates for the elasticity between debt and interest for the same group of observations.
If I understood the
margins, eyex() command correctly it simply takes the natural log of the chosen variables to calculate d(log f)/d(log x).
eyex command give a more exact estimate?