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st: cluster option with fixed effects

From   Eliana Garces <>
To   <>
Subject   st: cluster option with fixed effects
Date   Thu, 23 Nov 2006 17:28:22 +0100

Dear all,

I am running the following regression with fixed effects for countries and the cluster option.

xi: reg lp  totalq size  i.subsidiary  i.period au be de ge gr sw fi po uk hu sl lt lit lux ne no slo it if segment==0,cluster(country)

 Is it acceptable to use cluster for a variable already controlled for in the regression (in this case it is country)? I am getting extremely hight t-statistics (above 150 for some coefficients) that are much higher than the t-statistics of the regression without the cluster option.
Thanks for the feedback.

Eliana Garces
Economist- Brussels

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