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re: RE: st: areg Vs fe


From   Richard Williams <[email protected]>
To   [email protected], "[email protected]" <[email protected]>
Subject   re: RE: st: areg Vs fe
Date   Tue, 13 Mar 2012 09:18:53 -0500

At 07:58 AM 3/13/2012, Christopher Baum wrote:
<>
Richard wrote

I don't think it is a matter or running a test; it is a matter of
which is appropriate given the nature of your problem. The help for
areg says "areg is designed for datasets with many groups, but not a
number of groups that increases with the sample size."

Good advice indeed. Note that in

webuse grunfeld,clear
reg invest mvalue kstock i.company
xtreg invest mvalue kstock,fe
areg invest mvalue kstock, absorb(company)

The three sets of point and interval estimates are identical, as they are estimating exactly the same model.

Aren't the standard errors supposed to be slightly different? Would they be if there were a lot more companies?


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Richard Williams, Notre Dame Dept of Sociology
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