st: XTIVREG

[Giorgio Ricchiuti <ricchiuti.g@tiscali.it>]

Dear all,

 

I've been applying a panel gravity model of this kind:

 

xtreg trade gdp pop rer, fe

 

with an obvious simultaneous bias. GDP and POP are my endogenous variables and I'd like to instrument them with their lags. Hence, I think that my command has to be

 

xtivreg trade rer (gdp pop = L.gdp L.pop),fe

 

is it correct? how does it work? Are you sure that I've been instrumenting GDP with L.GDP and POP with L.POP?

thanks a lot

Giorgio