Re: st: interacted fixed effects

[Scott Cunningham <scunning@gmail.com>]

Dear Kremena,

Stata has the ability to do this automatically within its  -xt-  
commands.  If you were wanting to eliminate the within importer fixed  
effects in a linear model, it would be:

xi:xtreg depvar indepvar, fe i(identifier)

where identifier identifies each importer.  You would include year  
and exporter effects by:

xi:xtreg depvar indepvar i.year i.exporter, fe i(identifier)

Try this and it should do what you're wanting it to do.

sc

On Apr 27, 2006, at 2:48 AM, Kremena Platikanova wrote:


> Dear List Members,
>
> I have a panel of bilateral trade data. I want to estimate a model  
> with
> importer-year, exporter-year and importer-exporter fixed effects:
> Y_ijt = a_it + b_jt + c_ij + d*X_ijt + e_ijt
> where i = importer, j = exporter, t = time.
>
> If using dummy variables is not feasible, is it appropriate to  
> demean the data
> in the following way:
> Y_ijt* = Y_ijt - MeanY_it - MeanY_jt - MeanY_ij + 2*Overall MeanY
> (where MeanY_it is Y_ijt avaraged over j) and similarly for X_ijt*,  
> and then
> regress Y_ijt* on X_ijt*.
>
> Thank you for your help,
>
> Kremena
> --
> Kremena Platikanova
> Ph.D. Candidate
> Department of Economics
> University of Colorado, Boulder
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