Re: st: RE: RE: estimation with a time trend.

[natasha agarwal <agarwana2@googlemail.com>]

I am really really sorry for this confusion what I have created here.

I wanted to introduce a time trend in my estimation where my years go
from 2001-2005. I was estimating an augmented production function
using an unbalanced panel data using a within estimator.

With time trend I mean:

panel identifier    year      time trend
1                      2001        1
1                      2002        2
1                      2003        3
1                      2004        4
1                      2005        5
2                      2001        1
2                      2002        2

The only way I knew how to do it was to use the egen -group-
command.That is why I wanted to do the egen-group- command.

However I was not confident whether the creation of the same was
correct because of the unbalanced nature of the data.

for the purpose of estimating my equation I issue the following command:

egen t=group(year)
xtreg lnrval lnk lnw lnvfdi t, fe vce(robust)


Thanks
Natasha

On Mon, Jul 5, 2010 at 3:52 PM, Maarten buis <maartenbuis@yahoo.co.uk> wrote:
> --- On Mon, 5/7/10, natasha agarwal wrote:
>> I was wondering then what is the point in doing this then?
>
>
> This thread is getting very confused. Let me try
> to reconstruct the argument:
>
> You asked about estimating a time trend by first
> creating a variable using -egen group()-. Now
> we had to guess why you would want to do that.
> We guessed that you wanted to make sure that your
> time has the value 0 at some a meaningful point
> in time. Which in general is good, though it
> doesn't matter if you used a fixed effects model
> without interactions (it does matter if you
> include interactions with time).
>
> Even though making sure that time has a meaningful
> 0 value is a good idea, using -egen group()- for
> that is a very dangerous idea, and you should never
> do that. Instead you should just substract some
> meaningful 'midpoint' or 'reference year'.
>
> So, to clear up this thread:
> Why did you want to use -egen group()-?
>
> -- Maarten
>
> --------------------------
> Maarten L. Buis
> Institut fuer Soziologie
> Universitaet Tuebingen
> Wilhelmstrasse 36
> 72074 Tuebingen
> Germany
>
> http://www.maartenbuis.nl
> --------------------------
>
>
>
>
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