the denominator of independent variable is the dependent var

[bobchowz]

Hi all,

I have a quick question.
My estimation equation is like log(RGDP per capita)= F(FDI/GDP, w) w is other variables.
Since the denominator of independent variable is the numerator of dependent variable, AKA RGDP, is there any paper talked about the problem it may have, or can anyone point out directly.

Appreciate!

[bobchowz]

FYI I use TSLS

[bobchowz]

Problem solved.
Found a working paper of OECD, named New Horizons for Foreign Direct Investment, together with another paper from University of Copenhagen, named On the Causal Links between FDI and Growth in Developing Countries.