st: Small sample with clustered data

[Lars12398@web.de]

Dear Statalist,

My sample consists of 50 countries with 26 of them being EU Member States.
The problem is that the values of the dependent variable for the EU members are not
independent of each other. Thus, I created a dummy variable "eucluster" that indicates
if a country is in the EU (1=yes; 0=no) and used the cluster(eucluster) option after the
OLS Regressions in Stata 10. However, in "Clustered Errors in Stata"
(Nichols/Schaffer 2007 -http://repec.org/usug2007/crse.pdf) it is mentioned that if M,
the number of clusters, is small matters could even get worse by using the cluster option (Sheet 20).
M=50 seems to be the minimum number of clusters required.

I have 24 clusters consisting of 1 country and 1 cluster comprising 26 EU members (6 independent variables).
I do not know how to deal "correctly" with these clustered data in Stata. Hence, I would highly appreciate if someone could
give me advice or suggest a solution on how to deal with the clustered data in such a small sample.

Thanks for Consideration.

Lars
___________________________________________________________
SMS schreiben mit WEB.DE FreeMail - einfach, schnell und
kostenguenstig. Jetzt gleich testen! http://f.web.de/?mc=021192
*
*   For searches and help try:
*   http://www.stata.com/help.cgi?search
*   http://www.stata.com/support/statalist/faq
*   http://www.ats.ucla.edu/stat/stata/