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Thread: Partial effect and first-difference estimator

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    Partial effect and first-difference estimator




    Hello guys,

    I have a exercise for which I found an answer but i'm not sure of it. I need to estimate the demand for passenger flights in the US based on the following equation:

    ln(passengers)it = β0 + β1 ln(airfare)it + β2 ln(distance)i + ci + uit

    with ci is the individual effect and uit the idiosyncratic error term.

    I need to say what is the estimated partial effect of the airfare on the average number of passengers per day.
    If it have that results (see attachments), can I say the increase of 1% in the air fare leads to a decrease of -0.9% of the average number of passengers per day ?
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