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Thread: Compute and interpretation of logarithmic dependent variable

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    Compute and interpretation of logarithmic dependent variable

    Hello everyone,

    For a paper I am using a model from another paper. However, I have some difficulties determining how I should generate this dependent variable and interpret it. I uploaded the formula and the text explaining what it should do.

    The dependent variable, the annual average growth of per capita GDP is measured from 1995 to 2007. --> My paper uses 1996 to 2012.

    I have all the different GDP per capita data per year and an average value over those years.

    My interpretation:
    - I divide the GDP of 2012 through the GDP of 1996.
    - Then from that division I put in in a logarithm, log(GDP12/GDP96).
    - Then I need to multiply it by 1/17.

    However, how does this measure use the GDP values of all the years in between 2012 and 1996? Or does it just measure the change between those two points and for each separate year it gives the same value? Or how should I interpret this.

    Thanks in advance.

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