/* Do File to Estimate FCI-AGE Relationship in the Presence of Heteroskedasticity */

/* Import Data */
import excel "C:\Documents\Classes\Econ4230\R_and_Stata\Data\FCI.xlsx", sheet("Sheet1") firstrow

/* Scatter Plot of X-Y data */
twoway (scatter FCI Age)

/* OLS Regression */
regress FCI Age

/* Save OLS Residuals */
predict uhat, resid

/* Plot OLS Residuals vs. Age */
twoway (scatter uhat Age)

/* Breusch-Pagan Het Test */
estat hettest

/* OLS with Robust Standard Errors */
regress FCI Age, vce(robust)

/* GLS with Var(u) Quadratic in Age */
gen ystar = FCI/Age
gen invAge = 1/Age
regress ystar invAge
predict uhat2, resid
twoway (scatter uhat2 Age)

/* GLS with Var(u) Linear in Age */
gen ystar2 = FCI/sqrt(Age)
gen xstar1 = 1/sqrt(Age)
gen xstar2 = sqrt(Age)
regress ystar2 xstar1 xstar2
predict uhat3, resid
twoway (scatter uhat3 Age)