Direct and indirect effects in OLS regression

sysuse auto, clear

eststo clear

// Bivariate relationship:
eststo: regress price mpg
// Accounting for confounding variable:
eststo: regress price mpg displacement

// Accounting for confounding variable in three steps:
  // 1
quietly regress mpg displacement
predict u, residuals
  // 2
quietly regress price displacement
predict v, residuals
  // 3
eststo: regress v u

// Table:
esttab, rename(u mpg) se nomtitle label varwidth(30)