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Re: st: state trends


From   sara borelli <saraborelli77@yahoo.it>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: state trends
Date   Tue, 19 Oct 2010 15:54:34 +0100 (BST)

Hi Maarten,
thank you very much for your reply

I understood the reply to my first question. Just a clarification;
Is that correct to say that in any case the coefficient of my variables of interest will always be the same regardless of whether I use year=1990,1991  or its scaled counterpart? Just the coefficient on state fixed effects change and the units in which the trend is measured should not matter...is that correct?

I am not sure I understand the reply to the second question (quadratic trend). If the quadratic trend based on orginal year variable causes a drop in state fixed effects  why it does not happen the same when I use the quadratic trend based on the re-scaled variable? Would be  correct at this point to use the quadratic trend based only on the re-scaled year variable?

thanks a lot for any further calrification
sara

--- Mar 19/10/10, Maarten buis <maartenbuis@yahoo.co.uk> ha scritto:

> Da: Maarten buis <maartenbuis@yahoo.co.uk>
> Oggetto: Re: st: state trends
> A: statalist@hsphsun2.harvard.edu
> Data: Martedì 19 ottobre 2010, 09:23
> --- On Mon, 18/10/10, sara borelli
> wrote:
> > I am running a model with state and year fixed effects
> and
> > I need to add state specific time trends. I created a
> dummy
> > for each state and interacted it with the variable
> year,
> > where year=1990,1991,1992,1993...
> > The trend variables created are:  trendstate1 
> > trendstate2 ....trendstate51
> > 
> > I also re-scaled the year variable so that
> > yearnew =1 if year==1990; =2 if year==1991; =3 if
> > year==1992  and so on. The trend variables in
> this case are: 
> > trendnewstate1...trendnewstate51
> > 
> > I then regressed:
> > xi: y  x  i.year i.state
> trendstate1-trendstate51
> > and 
> > xi: y  x  i.yearnew  i.state
> trendnewstate1-trendnewstate51
> > 
> > the coefficient of my X variable of interest is the
> same in
> > both regressions but the coefficient on the state
> fixed
> > effects are very different. It must be due to the
> rescaling
> > of the year variable, but I am not sure why.
> 
> In the top regression you get for each state the deviation
> 
> from the reference state in the expected y if x = 0 in the
> year 
> 0 (i.e. 2010 years ago). Which is probably a "not-so-mild"
> extrapolation. In the bottom regression you get the same,
> but
> now for 1989.
> 
> > I then tried to add a quadratic time trend. That is I
> > interacted each state dummy with year2=year*year.
> > Then I run
> > xi: y  x  i.year i.state
> trendstate1-trendstate51     
>    
> >          
> >    trendsquarestate1-trendsquarestate51 
> > but stata altogether drops the state fixed effects
> > 
> > However, if I
> create   yearnew2=yearnew*yearnew and
> > quadratic trends based on it and run
> > xi: y  x  i.year   i.state 
> >
> trendnewstate1-trendnewstate51   trendnewsquarestate1-trendnewsquarestate51
> > 
> > then stata does not drop the state fixed effects and
> > estimates differ I am not sure what is going on or
> what
> > I am doing wrong
> 
> The devil is in the detail, it probably depends on exactly
> what variables are in the list trendstate1-trendstate51. 
> 
> In simular situations I usually work these things out for 
> one state, and than start creating interactions. Actually,
> I usually start with trying to bypass that step, get into
> trouble, and than go back and work it out step by step.
> 
> 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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