Re: st: test for time trend

[Michael Hanson <mshanson@mac.com>]

On Feb 4, 2006, at 4:29 PM, Cornelia Schmidt wrote:

> I know it is a basic question, but it would be great if you could help 
> me.
> I have a panel dataset for a sample of 50 countries over a period of 
> 40 years.
>
> How can I test if there is a time trend in the data and how can I 
> correct for it?
	Individual trends or common?  Deterministic or stochastic?  Linear or 
otherwise?  You'll need to provide a bit more information to get an 
appropriate answer to your question.  While you could simply dummy for 
years, that may be effectively throwing away useful information in the 
time domain (certainly year dummies won't help identify a time trend);  
with T = 40 as you have, you may want to consider an explicit model of 
the time-series process(es) contributing to your data generation 
process.  Hope that helps.

                                        -- Mike

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