The constant appears because the way Stata does the within transformation is not
just
Yit - YBARi,
where YBARi is the average of Yt in group i,
but Yit - YBARi + YBARit,
where YBARit is the average Y over time and across groups. Hence, a constant
will show up again.
Hope this helps.
Martin
Hello,
the stata command
xtreg ... , fe i(...);
uses a within transformation, which means that all the fe-dummy variables
disappear and also a constant. In the output of this function, stata still
rapports a constant coefficient. How is this calculated?
Randy Brenkers
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