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Re: st: fixed effects with multicollinearity
From
daniel klein <[email protected]>
To
[email protected]
Subject
Re: st: fixed effects with multicollinearity
Date
Fri, 29 Jul 2011 11:01:17 +0200
Colin,
please note that mean centring does nothing to solve the underlying
problem of collinarity (if there is something like that)., see e.g.
Echambadi and Hess (2007) or Shieh, G. (2011).
However, in another post
(http://www.stata.com/statalist/archive/2011-04/msg01204.html) Maarten
Buis pointed out that in the special case, where a variable is
interacted with itself, to model non-linearities, centering can help.
Echambadi and Hess (2007). Mean-Centering Does Not Alleviate
Collinearity Problems in Moderated Multiple Regression Models.
Marketing Science, 26: 438-445
Shieh, G. (2011). Clarifying the role of mean centring in
multicollinearity of interaction effects. British Journal of
Mathematical and Statistical Psychology, 64: 1-12
Best
Daniel
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