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From |
Christopher Baum <kit.baum@bc.edu> |

To |
"statalist@hsphsun2.harvard.edu" <statalist@hsphsun2.harvard.edu> |

Subject |
Re: st: Binary Variables |

Date |
Wed, 2 Jun 2010 07:54:26 -0400 |

<> Not true. The demeaned depvar will merely be zero for that region; it will not be dropped from the regression. E.g., webuse grunfeld,clear xtreg invest mvalue kstock,fe replace invest = 410.475 if company==2 xtreg invest mvalue kstock,fe assert e(N) == 200 random effects would make no difference; the depvar for that region would be (k - \lambda k) = k( 1 - lambda), where k is the constant value of the depvar and lambda is the quasi-demeaning parameter. That will still be a constant, just not zero. Kit On Jun 2, 2010, at 7:16 AM, Maarten buis wrote: > --- 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... > > Hope this helps, > Maarten > > -------------------------- > Maarten L. Buis > Institut fuer Soziologie > Universitaet Tuebingen > Wilhelmstrasse 36 > 72074 Tuebingen > Germany > > http://www.maartenbuis.nl > -------------------------- > > > > > * > * For searches and help try: > * http://www.stata.com/help.cgi?search > * http://www.stata.com/support/statalist/faq > * http://www.ats.ucla.edu/stat/stata/ Kit Baum | Boston College Economics & DIW Berlin | http://ideas.repec.org/e/pba1.html An Introduction to Stata Programming | http://www.stata-press.com/books/isp.html An Introduction to Modern Econometrics Using Stata | http://www.stata-press.com/books/imeus.html * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**References**:**Re: st: Binary Variables***From:*Maarten buis <maartenbuis@yahoo.co.uk>

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