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st: LSDV vs. FE


From   "Asgar Khademvatani" <akhademv@ucalgary.ca>
To   statalist@hsphsun2.harvard.edu
Subject   st: LSDV vs. FE
Date   Fri, 27 Feb 2009 11:47:30 -0700 (MST)

Hello All,

In general, I understand that LSDV estimation method  is an alternative
way of modeling fixed-effectsin in panel data approach , or it is
equivalent to FE method. But, in STATA, we can specify a LSDV model in two
ways:

(1)with common constant as:
LS y d1 d2 d3 x1 x2 x3   or

(2)we can run  it without constant or with non-constant option as:
(for example)LS d1 d2 d3 x1 x2 x3, nonconstant

I got a couple of concerns and questions as follows:

First,  which syntax of LSDV given above is appropriate or reliable for
modeling a fixed-effects model? I mean it should be run with constant or
without constant as shown above?

Second, when we run FE model in Stata as:

xtreg y x1 x2 x3, fe

My question is that is this equivalent to LSDV with constant or without
constant?

Thank you in advance.

Regards,
Asgar Khademvatani
Ph.D. Candidate-Department of Economics
The Faculty of Social Sciences
University of Calgary,
2500 University Dr., NW., Calgary,
Alberta, Canada, T2N 1N4
Email: akhademv@ucalgary.ca
Tel: +1(403)210-2574

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