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Dependent Variable: D (LRPP)
Method: Least Squares
Date: 05/25/04 Time: 10:57
Sample: 1960–2001
Included observations: 42
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Variable
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Coefficient
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Standard Error
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t-Statistic
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P-Value
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D(LGDP(-1))
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-0.389742
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0.104793
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-3.719164
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0.0007
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D(LPUB(-1))
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-0.086158
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0.036614
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-2.353126
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0.0242
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D(LPUB(-1))*D92
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-0.579867
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0.223008
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-2.600213
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0.0134
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D(LRPP(-1))
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0.854943
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0.131145
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6.519069
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0.0000
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D(LRPP(-2))
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-0.375947
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0.127824
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-2.941118
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0.0057
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WH
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0.035633
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0.007753
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4.596012
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0.0001
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R-squared
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0.865946
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Mean dependent variable
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-0.002188
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Adjusted R-squared
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0.847327
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S.D. dependent variable
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0.039870
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S.E. of regression
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0.015578
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Akaike info criterion
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-5.354293
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Sum squared residuals
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0.008737
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Schwarz criterion
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-5.106055
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Log likelihood
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118.4402
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Durbin-Watson statistic
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1.950186
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Definitions of the Variables:
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D(LRPP) = change from one year to the next of the logarithm of the real drug price, defined as the ratio of the pharmaceutical price index to general consumer price index.
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D(LGDP(-1)) = lagged value of the change from one year to the next of the logarithm of real gross domestic product per capita (measure of the growth of economic activity).
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D(LPUB(-1)) = lagged value of the change from one year to the next of the logarithm of the government’s share of pharmaceutical spending (growth of government influence).
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D92 = 0/1 dummy variable taking on the value of 1 for years after 1991 to capture the effects of OBRA of 1990 and the Veterans Act of 1992 (change in the growth of government influence).
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D(LRPP(-1)), D(LRPP(-2)) = lagged values of the change from one year to the next of the real drug price (i.e., the prior one and two years of real drug price growth).
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WH = 0/1 dummy variable taking on the value of 1 after 1983 to capture the presence of the Waxman/Hatch Act.
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