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st: Re: Re: Dummy Variable Trap


From   "Michael Blasnik" <michael.blasnik@verizon.net>
To   <statalist@hsphsun2.harvard.edu>
Subject   st: Re: Re: Dummy Variable Trap
Date   Wed, 08 Jun 2005 12:27:28 -0400

My prior post was just plain wrong...if the dummy variable set span the full range of time periods then they will always sum to 1 and one variable will be dropped, whether or not the panels are balanced. I once encountered this problem when running a do file on an updated dataset where the dummy variables were manually generated and a new category had been introduced. I would double check whether somethng like this happened to your data.

Michael Blasnik
michael.blasnik@verizon.net

----- Original Message ----- From: "Michael Blasnik" <michael.blasnik@verizon.net>
To: <statalist@hsphsun2.harvard.edu>
Sent: Wednesday, June 08, 2005 9:00 AM
Subject: st: Re: Dummy Variable Trap



If your panels are unbalanced, then xtreg may not need to drop any of the time dummies because they will not always sum to 1 and so will not be perfectly collinear.

Michael Blasnik
michael.blasnik@verizon.net

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