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Re: st: third variable...

From   "Clive Nicholas" <>
Subject   Re: st: third variable...
Date   Wed, 26 May 2004 16:36:00 +0100 (BST)


Thanks very much for replying. Just a few notes:

> If region is a categorical variable, and these are xt data, then there are
> two possibilities: region modifies the constant term (in which some sort
> of fe or re model should be used) or region modifies the entire
> relationship (including the coeff on midch). In  the latter case a set of
> interacted dummies would be used in a fe context, or one could use some
> sort of random-coefficients model (Hildreth-Houck).

Of course, I used REGION as an example. In terms of continuous 'third'
covariates, does the method change? I've been using OLS (when the
Gauss-Markov assumptions have been satisfied) or FGLS up until now. Most
of the explantory variables in my models (i.e., net turnout rates and
party competition) are continuous.

> I did not respond to the original enquiry since the answer seemed obvious:
> if there is a third variable that (one suspects) should be in the
> relationship, and it is measurable, the correct methodology is to include
> it.  After having done so, one may test for its relevance. Techniques such
> as dealing with proxy issues would only arise if the variable in question
> is not quantifiable.

I want to shriek my reply to this, but I'll simply say "I agree with all
of the above!" That's what I've been doing all along. It was a critical
query of part of my work that that brought on doubts that I was modelling
my variables of interest in the correct way.

CLIVE NICHOLAS        |t: 0(044)191 222 5969
Politics              |e:
Newcastle University  |
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