/*
Simple OLS regresion example
Using State Tax and Per capita cigarette consumption 

*/

use http://bigblue.depaul.edu/jlee141/econdata/eco375/state_cig_data
* dscribe data
desc

* generate real taxes
gen real_tax=(state_tax+federal_tax)/cpi

* get means of real tax and per capita consumption
sum packs_pc real_tax

* get correlation coefficient
corr packs_pc real_tax

* get regression estimate
reg packs_pc real_tax

* plot the data with regression line
tw (scatter packs_pc real_tax) (lfit packs_pc real_tax)