Re: st: How to interpret time dummies in simple difference in difference regression

[Melisa Haytasingh <prettymelisa@gmail.com>]

Hi guys,
thanks for taking the time to help me.

I have to stick with my regressions as they are (i know they seem
simple but its ok for now), and just include some notes about it in my
study.
I still am not sure about how to interpret the coefficients. Here are
the results of the 2 regressions i described before,

                                         GDPpercapita                 Inflation
time                                       3.664***                       0.002

TnT_no_resources            -1734.545                   -1.029

TnTresources                    1708.438                      4.903

barbados_before1970     -2086.949                    1.528

barbados_after1970         2177.933                      2.641

I just need help to interpret one of the coefficients and then I can
go from there.

Thanks again guys.

Cheers,
Melisa.

On 18 November 2013 18:46, Austin Nichols <austinnichols@gmail.com> wrote:
> Melisa Haytasingh <prettymelisa@gmail.com>:
> Probably you want to define a new variable RelTim=time-1970 for time
> relative to the discovery of resources, and then interact that with
> dummies for each country. Graph your predictions to see that the coef
> on the dummy for TnT will be the level jump in gdp_percapita and the
> coef on TnTxRelTim will be the difference in time trends before and
> after discovery. Using time instead of relative time makes it easy to
> project your comparisons back to the nonexistent year zero, rather
> then making comparisons at 1970. It's not clear to me why you would
> want to assume constant linear growth in gdp_percapita in all
> countries as your baseline (counterfactual), but linear time trends
> are popular in these kinds of regressions.
>
> On Mon, Nov 18, 2013 at 7:24 AM, Melisa Haytasingh
> <prettymelisa@gmail.com> wrote:
>> Hi guys,
>>
>> I'm doing a regression to analyse the difference between resource-rich
>> Trinidad & Tobago and their resource-poor Caribbean neighbour,
>> Barbados. I am treating resources (oil and gas) as the endogenous
>> variable and regressed GDP on 5 variables: a time trend, dummy taking
>> 1 for all observations for T&T before resources (before 1970), dummy
>> taking 1 after discovery of resources, dummy taking 1 for obs of
>> Barbados before 1970 and dummy taking 1 for obs of Barbados after
>> 1970. The regression looks like this in Stata:
>>
>> -          regression 1:
>>
>> reg gdp_percapita time TnT_no_resources TnTresources
>> barbados_before1970 barbados_after1970, nocons
>>
>> -          regression 2:
>>
>> reg inlfation time TnT_no_resources TnTresources barbados_before1970
>> barbados_after1970, nocons
>>
>>
>> I am having trouble figuring out how to interpret the results. I think
>> I need to find the difference between the coefficients like this:
>>  (barbados_before1970 - TnT_no_resources) and (barbados_after1970 -
>> TnTresources) and then compare those figures with each other. But I am
>> not sure. Also, I am not sure about how to interpret the coefficient
>> itself on each of the dummies. I tried to look for similar regressions
>> online and I got a better overall understanding but still confused
>> about how to interpret. :(
>>
>>
>> Thank you very much for any help.
>>
>>
>> Sincerely,
>>
>> Melisa
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