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Re: st: xtnbreg Initial values

From   Maarten buis <>
Subject   Re: st: xtnbreg Initial values
Date   Fri, 7 May 2010 07:33:15 +0000 (GMT)

--- On Fri, 7/5/10, Ivan Png wrote:
> I want to run a panel fixed effect negative binomial
> regression.
>   * dep variable: patentcount
>   * indep variables: xrd revt capx yr1976-yr2006
> I ran:
>  xtnbreg patentcount xrd revt capx yr1976-yr2006 , fe
> and got error message: "note: 395 groups (395 obs) dropped
> because of only one obs per group note: 2893 groups 
> (20642 obs) dropped because of all zero outcomes
> initial values not feasible
> r(1400);"

I would first focus on how many observations are left.
Remember that fixed effects regression only uses information
from changes within a individual. It looks like for a large
part of your data there are no such changes, so these are 
dropped (that is what the two notes mean). If there are only 
a few observations left then a fixed effects design just 
doesn't make sense: You are trying to use information that 
just isn't present in the data. In that case you could try a 
random effects design, this way you can also use information 
from variation between individuals, but the price is that 
the individual specific error term is forced to be 
uncorrelated with the observed variables. As the economists 
say: there is no such thing as a free lunch. 

Hope this helps,

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


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