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# Re: st: taking out the correct year-fixed-effects.

 From Nils Braakmann To statalist@hsphsun2.harvard.edu Subject Re: st: taking out the correct year-fixed-effects. Date Fri, 3 Dec 2010 06:07:00 +0000

```Andreas, are you trying to produce something similar to figure 1 and 2
in Andrew E. Clark, Ed Diener, Yannis Georgellis and Richard E. Lucas
(2008), lags and leads in life satisfaction: A test of the baseline
hypothesis, Economic Journal 118, pp. F222-F243?
If so, you might want to look at their specification. Additionally,
the easiest way to get everything in 2004 \$ would be to simply deflate
the income variables using the appropriate price index before running
the regressions.

Cheers,
Nils

On Thu, Dec 2, 2010 at 6:06 PM, andreas nordset
<andreas.nordset@gmail.com> wrote:
> Dear Listers,
>
> I have a balanced panel of households from 1995 to 2007.
>
> They are all hit by an unemployment shock in either of the years 1999-2003.
> Hence I can observe ALL households as early as 4 years prior to and 4
> years after the shock.
>
> I run the regression
>
> -reg income relative-year-dummies calendar-year-dummies-
>
> ,where i leave out the calendar year dummy for 2004, to make that as a
> "base year".
> When i then plot the Constant+ relative year dummies in a diagram from
> relative year -4 to +4 where Year-Fixed effects are washed out , I can
> roughly state that "Income values are in 2004-\$".
>
> Maarten simplified this work significantly by suggesting to run something like:
>
> -reg income relative-year-dummies calendar-year-dummies-
>
> This gives me a nice table with correct values for each of the
> relative years. However, this procedure gives the plot a different
> level. So I can no longer state that values are in the value of some
> base year. Does anyone know a way to set it up so I can again
> interpret the values to be of 2004-units ( or any other year).
>
>
> Thanks a lot for the help,
>
> Andreas
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```