Hi, yes, it is the correlation coefficient.   Thank you very much for your inputs. But I was seeing the problem in a incorrect way. I want to get a variable from a fixed variable and the correlation between a random variable and a fixed one is zero as one of the users has rightly pointed out.  ... View more

Hi.   Thanks. You are right. My formulation is not correct.   And you have understood what I want to do correctly. I will now try to model List Prices as a function of Transaction Prices (market prices) and area. And I will look into tyour book since I do not know how to simulate a response variable.   Regards. ... View more

Hi, thanks for your prompt interest (I have recently asked for one of your books; still on transit... 🙂 ).   The variable (area) is to remain fixed. The error (i.e., List Price - Transaction Price) is assumed to be log-normally distributed (i.e., basically the error is always positive; sellers are always asking for more than they actually receive from the market).   I just want to derive a vector of errors, which will be correlated with the area of a property. With this vector I will derive list prices (which I do not have in my dataset): List Price = Transaction Price + Error.   After this, I will generate data (in a Monte Cralo Study) that will mirror my sample characteristics (which will then have the new simulated List price variable). For doing this, I will follow the procedures described in "SAS for Monte Carlo Studies; A guide for qunatitative researchers". My sample has around 60% of all market transactions carried out in Portugal (2009-2013). I am applying hedonic regression models to describe transaction prices:   Ln(transaction prices) = f(characteristics) and would like to know what happens if I use Ln(List price) instead of transaction prices.   Thanks (do not know if this helps; perhaps too much info...). ... View more