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Re: st: Binary Variables

From   Natalie Trapp <>
Subject   Re: st: Binary Variables
Date   Wed, 02 Jun 2010 13:42:21 +0200

Thank you very much.
It is not possible that my dependent variable is constant within a region and I want to have the effects of different regions, so I will try the random effects regression rather than aggregating the regions.
Thank you very much once again!

On 6/2/2010 1:20 PM, Nick Cox wrote:
Another alternative is just to aggregate some regions. If the response is identical, you lose nothing, except that some thought needs to be given to the combination of predictor values for those regions. For example, is population weighting appropriate?


Maarten buis

--- On Wed, 2/6/10, Natalie Trapp wrote:
I use a Dummy Variable for 150 regions within the EU27.
When I regress the model, I use one region as a reference
group, but Stata still automatically omits four to five more
regions. Is it maybe because the regions are too similar in
their characteristics so that I have to build groups of
similar regions? Or is there another way how I can do the
regression with all regions of interest?
This is a fixed effects regression (assuming you are using
linear regression, -regress-).  This type of regression can
only make use of variation within a region, so if the dependent
variable is constant within a region, the region will be dropped.
Your alternative is to use random effects regression (see:
-help xtreg-), but that has disadvantages of its own. It is up
to you to decide which disadvantages you think are least bad...

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