Panel data correlation
Posted: Sun Jun 02, 2019 10:11 am
Dear All
I want to study the effect on ROA for a pharmacy that has an online pharmacy department compared to pharmacies that don't.
This is my regression:
Return on assets = b0 + b1*ln(total assets) + b2*ln(firmage) + b3*leverage + b4*current ratio + b5*dummy online pharmacy + b6*dummy online pharmacy*ln(total assets) + e
However, the correlation between 'dummy online pharmacy' and 'dummy online pharmacy*ln(total assets)' is around .995...
Is this a problem (and do I need to let the last variable out (dummy*ln total assets)?) or is this a normal thing? All other variable are not really correlated (around .3 max).
Above that, can I check VIFs when using panel data in Eviews 9?
I'm working with panel data that runs from 2009-2017
Thx in advance
I want to study the effect on ROA for a pharmacy that has an online pharmacy department compared to pharmacies that don't.
This is my regression:
Return on assets = b0 + b1*ln(total assets) + b2*ln(firmage) + b3*leverage + b4*current ratio + b5*dummy online pharmacy + b6*dummy online pharmacy*ln(total assets) + e
However, the correlation between 'dummy online pharmacy' and 'dummy online pharmacy*ln(total assets)' is around .995...
Is this a problem (and do I need to let the last variable out (dummy*ln total assets)?) or is this a normal thing? All other variable are not really correlated (around .3 max).
Above that, can I check VIFs when using panel data in Eviews 9?
I'm working with panel data that runs from 2009-2017
Thx in advance