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st: re: WLS and dummies


From   Kit Baum <baum@bc.edu>
To   statalist@hsphsun2.harvard.edu
Subject   st: re: WLS and dummies
Date   Sun, 17 Apr 2005 19:51:45 -0400

Javier went on to say

Thanks for the answer Kit and all, I tried to use the
command lincom in the following way:

The data set is (a sample):

var1 var2 var3 var4 var5 var6 var7
.576 1 0 0 1 0 0
.354 0 0 1 0 1 0
.542 1 0 0 0 0 1
.6354 0 1 0 1 0 0
.875 1 0 0 0 1 0
.524 0 1 0 0 0 1
.324 0 0 1 0 1 0
.643 1 0 0 1 0 0
.523 0 1 0 0 0 1
.089 0 0 1 0 1 0

and I regress :

reg var1 var2 var3 var4 var5 var6 var7

and it drops var4 and var7 due multicollinearity. And
I use lincom:

lincom var4

These are not a MEE set of dummies. If they were, there would not be more than one dropped due to collinearity. In the obs. leading 0.524, there is a 1 in both var3 and var7. So first of all you have to get your dummies straightened out.

Re lincom, include all but one of the dummies in a MEE set in a regression. Say that you have created dummies from rep78 in auto, so there are 5.

reg price rep1-rep4

The constant term is rep5.

forv i=1/4 {
lincom _cons + rep`i'
}

will give you the means of price for each of the other categories.

Kit Baum, Boston College Economics
http://ideas.repec.org/e/pba1.html

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