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RE: st: Xtreg is dropping dummy variable for OECD countries.


From   Tutor 2005 UM <tutor2005um@googlemail.com>
To   <statalist@hsphsun2.harvard.edu>
Subject   RE: st: Xtreg is dropping dummy variable for OECD countries.
Date   Tue, 15 Aug 2006 01:11:34 +0200

Hi Bob,
Thanks for the quick reply.
If I understand you correctly, you are saying I cannot get
a statement on group specific characteristics, e.g.
conditional convergence from panel data?
Or I would need to split my data in two files (say non-oecd
and oecd) and compare the coefficients by hand. Would that
work?
Thanks again.

steffen

> -----Original Message-----
> From: owner-statalist@hsphsun2.harvard.edu 
> [mailto:owner-statalist@hsphsun2.harvard.edu] On Behalf Of 
> brijkers@worldbank.org
> Sent: Tuesday, August 15, 2006 12:44 AM
> To: statalist@hsphsun2.harvard.edu
> Subject: Re: st: Xtreg is dropping dummy variable for OECD countries.
> 
> 
> Dear Steffen,
> 
> As you are using a fixed-effects model, identification occurs 
> on the basis of time-varying characteristics only. Since 
> dummies do not change over time, Stata drops them (remember 
> that fixed-effects are essentially transforming all variables 
> into deviations from their average and that the impact of 
> observable characteristics that are fixed such as gender and 
> location cannot be estimated).
> 
> Hope this helps,
> 
> Best,
> 
> Bob
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