Re: st: RE: xttobit initial value not feasible

 From "sarah young" To statalist@hsphsun2.harvard.edu Subject Re: st: RE: xttobit initial value not feasible Date Mon, 14 Apr 2008 19:24:34 +0100

```Nick,

Thanks so much for your reply again. you are right that 2/3 firms do
not export anything in my data, i.e. their export intensity is zero.
export intensity is measued as the ratio of exports and total sales.
Many existing literature on determinants of export intensity use
Tobit, I understand a reason is that they treat export intensity as a
censored variable. I read somewhere that for a variable like this,
i.e. with over half of the observation as zero, Tobit model is more
appropriate than xtreg or xtabond2. Is that right? Thanks a lot.

Sarah

On Mon, Apr 14, 2008 at 6:48 PM, Nick Cox <n.j.cox@durham.ac.uk> wrote:
> My point had I think nothing to do with censoring, but with the geometry
> of what you are
>
> I am an economist.
>
> If I see that 2/3 of firms have zero "export intensity", then unless
> intensity
> has some special meaning, I infer from that that 2/3 firms do not export
> anything -- at least
> in the data period.
>
> sarah young
>
>
> Thanks for the response. I am just starting to learn econometrics. I
> thought that for a variable with over half of the observations are
> zero, like export intensity in my model, the variable could be treated
> as a censored variable. Or probably I am wrong?
>
> I have used xtreg and xtabond2 to estimate the model and they performed
> well.
>
>
>
> On Mon, Apr 14, 2008 at 5:31 PM, Nick Cox <n.j.cox@durham.ac.uk> wrote:
> > Consider a standard regression of your response (call it y) on any two
> > predictors.
> > Then a simplified analogue of your problem is that two-thirds of your
> > data lie on
> > the plane y = 0 and the other third lies on one side of that plane.
> > Geometrically that sounds
> > a pretty awkward situation to model. Having more predictors and using
> > tobit don't I think
> > make it any easier.
> >
> > There is no positive suggestion embedded here, just a thought that the
> > message doesn't sound that
> > surprising in such a light.
> >
> > Nick
> > n.j.cox@durham.ac.uk
> >
> > sarah young
> >
> > I have been trying to run xttobit without success. The problem is
> > "initial value not feasible".
> >
> > I have a panel of more than 4000 firms for 15 years, which altoghther
> > is about 62,000 firm-year observations. The dependent variable is
> > export intensity, two thirds of which are zeros. So I chose to use
> > Tobit model. The model is on the determinants of export intensity,
> > theoretically the choosing of the independent variables is fine, which
> > include TFP, age, size, R&D intensity etc, as well as year and
> > industry dummies. I have tried by using different sets of independent
> > variables, for example, including only one variable on the right side,
> > excluding year and industry dummies, all of these not working and the
> > message was the same, "initial value not feasible."
> >
> > I have searched on Statalist archive and found this thread:
> > http://www.stata.com/statalist/archive/2007-05/msg01036.html
> >
> > I tried to solve the problem according to the suggestions in the
> > thread but still it is not working. Could anyone give some advice?
> > What are the possible problems behind this? How to solve them?
>
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