# Regression of Real GDP on Intellectual Property Products Problem

I have a question regarding regressing the log growth of Real GDP on the log growth of Intellectual Property production which contributes to GDP (through using the expenditure method of calculating GDP). My question is does this regression make sense? I used the dollar values initially and I had an absurdly high R^2. After refreshing my knowledge of Time Series regression I changed the model as well as adding a lag for the log growth of IP production. The values I get seem as if they are economically and statistically sound. However, I am not sure if my model makes sense as IP production is a component of calculating Expenditure based GDP.

My goal for this was to find out what effect IP production will have on economic growth in order to quantify some type of relation that I can add in a report regarding to a project which proposes an increase in IP production of a state.

I apologize if the question seems rather trivial. I'm possibly undertaking more then what is required for this project but I'd like to gain some knowledge through doing this. Thank you in advance.

• This is my regression expression $\Delta \ln(GDP_t)=\beta_0+\beta_1t+\beta_2\Delta \ln(IP)_t+\beta_3\Delta \ln(IP)_{t-1}+\epsilon_t$ – Sam Jul 5 '17 at 16:30