# Re: st: AW: LSDV vs. FE

 From Asgar Khademvatani To statalist@hsphsun2.harvard.edu Subject Re: st: AW: LSDV vs. FE Date Sat, 28 Feb 2009 01:51:18 -0700

```Hello Martin,

```
Thanks for the comments. My understanding from Baum (2006) is that in running LSDV, which is equivalent to one-way FE, we should run with constant term as,( for instance if we have 4 Units):
```regress y d1 d2 d3 x         where d2 d3 d3 are dummies.

Am I right?

Thank you.
Asgar

Martin Weiss wrote:
```
<>
```You want to consult Baum (2006), chapter 9.1.1, where this is explained
```
quite clearly. See http://www.stata-press.com/books/imeus.html
```

HTH
Martin

-----Ursprüngliche Nachricht-----
Von: owner-statalist@hsphsun2.harvard.edu
[mailto:owner-statalist@hsphsun2.harvard.edu] Im Auftrag von Asgar
Gesendet: Freitag, 27. Februar 2009 19:48
An: statalist@hsphsun2.harvard.edu
Betreff: st: LSDV vs. FE

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?

Regards,
Ph.D. Candidate-Department of Economics
The Faculty of Social Sciences
University of Calgary,
2500 University Dr., NW., Calgary,
Tel: +1(403)210-2574

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```
```

--
Sincerely,
Department of Economics
University of Calgary

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