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Re: st: areg vs xi reg vs xtreg vs what else?


From   Maarten buis <maartenbuis@yahoo.co.uk>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: areg vs xi reg vs xtreg vs what else?
Date   Thu, 17 Sep 2009 13:56:56 +0000 (GMT)

--- On Thu, 17/9/09, Dana Chandler wrote:
> I'm running a large fixed effects model where each
> observation is a test score for every grade level, year,
> and state. My outcome variable is a test score and the
> focal independent variable is the % of HH in state that
> have cable television. The only other variable I have is
> log_population for the first year of my study at the state
> level which I also want to interact with each combination
> of grade-year.

Are your fixed effects States? In that case you can't use
your log_population variable, as that is constant within
states. The whole point of fixed effects, as that you 
control for all variation (observed and unbserved) that 
remains constant within a state. The price you pay is
that you cannot study what these constant variables do.
You can do so, if you are willing to do a random effects
model. But now you have to assume that the remaining 
unobserved state level variables are uncorrelated with
any of the observed variables. There is a huge difference
between disciplines in the willingness to accept this
assumption.

hope this helps,
Maarten

--------------------------
Maarten L. Buis
Institut fuer Soziologie
Universitaet Tuebingen
Wilhelmstrasse 36
72074 Tuebingen
Germany

http://www.maartenbuis.nl
--------------------------



      


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