sort state year gen ravgprs = avgprs/cpi label var ravgpr "real average price

during fiscal year, including sales taxes"

label

gen rtax = tax/cpi label var rtax "real average Cig specifice tax

during fiscal year" gen rtaxs = taxs/cpi label var rtaxs "real average total tax during

fiscal year,including sales taxes" gen rtaxso = rtaxs-rtax label var rtaxso "real average sales tax per pack

during fiscal year" gen lpackpc = log(packpc) gen lravgprs = log(ravgprs)

Real Percapita State Income

gen perinc = income/(pop*cpi) gen lperinc = log(perinc)encode-Encode string into numeric encode state, gen(snum)

10-year differences

gen ltpackpc = log(packpc/packpc[_n-1]) gen ltavgprs = log(ravgprs/ravgprs[_n-1]) gen ltperinc = log(perinc/perinc[_n-1]) gen dtrtaxs = rtaxs-rtaxs[_n-1] gen dtrtax = rtax-rtax[_n-1] gen dtrtaxso = rtaxso-rtaxso[_n-1] keep if year==1995

OLS and IV estimation - cross section -- 1995

reg lravgprs rtaxso, r

reg lpackpc lravgprs, r

ivreg lpackpc (lravgprs = rtaxso), r

ivreg lpackpc (lravgprs = rtaxso) lperinc, r

ivreg lpackpc (lravgprs = rtaxso rtaxs) lperinc, r

OLS and IV estimation - Differences 1995-1985

reg ltpackpc ltavgprs ltperinc,r

ivreg ltpackpc (ltavgprs = dtrtaxso) ltperinc, r

reg ltavgprs dtrtaxso ltperinc, r test dtrtaxso

ivreg ltpackpc (ltavgprs = dtrtax) ltperinc, r

reg ltavgprs dtrtax ltperinc, r test dtrtax

ivreg ltpackpc (ltavgprs = dtrtax dtrtaxso) ltperinc, r

predict e, resid

reg e dtrtaxso dtrtax ltperinc drop e qui test dtrtaxso dtrtax dis "---- OverID stat: " r(df)*r(F) _skip(10) "p-

value: " chiprob(r(df)-1,r(df)*r(F)) " -----"

reg ltavgprs dtrtax dtrtaxso ltperinc, r test dtrtax dtrtaxso