Dear All,
I have a quick question. I am not sure what I did wrong here. After I run ivregress 2sls, I tried to re-transform the logged dependent variable using Duan's (1983) Smearing Estimate (using Stata user's written command "levpredict"), but the predicted value is ridiculously large. The mean of real value is around 177 while the mean of the predicted value was 4,465. I did try to do it manually, but it gave the same result. I also tried another method using exp(lny)*exp(0.5*rmse^2) , but mean of the predicted value is still ridiculously unbelievable ; more than 4000. But if I just exp(lny) without multiplying it by exp(u) , the mean of the predicted value is 217, which is close but I know it is not correct without taking into account the residual. But I think the problem is the residual. Mean of the exponentiated residual is 27.
Is there anything I may have done incorrectly? Any suggestion?
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