One example: In our model, we estimate energy consumption by sectors with real production
by sectors and the relative prices by sectors which is calculated as energy prices by
sectors divided by output prices by sectors.
For this example, we then have 20 regressions due to 20 sectors and thus need to introduce
20 temporary variables which depict the aforementioned relative prices by sectors.
As we have many more estimations like this, partly for many more than 20 sectors, you
might get the picture. Most of the time, the temporary variables would not be used
further.
Does this explain the problem better?
Thanks
Fred