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st: RE: constant variable as IV in panel?


From   Nick Cox <n.j.cox@durham.ac.uk>
To   "'statalist@hsphsun2.harvard.edu'" <statalist@hsphsun2.harvard.edu>
Subject   st: RE: constant variable as IV in panel?
Date   Thu, 23 Jun 2011 10:36:37 +0100

There are many instrumental variable experts on the list who are better placed than I to comment on that side.

I just want to point out that the implicit climatology here is fallacious, not that it needs a geographer who has occasionally published on climate to point it out. Whatever scheme of climatic zones is being considered here, and there are many standards to choose from, 

1. it won't be true for most if not all large countries that they fall in just one climatic zone (think Russia, China, Brasil, USA, etc.) 

2. it won't even be true for many smaller countries

3. the assumption that the climate is unchanging is also incorrect, although probably less important than 1 or 2 for this study. 

More positively, climatic zonation throws away information that is encoded in variables like precipitation, temperature, etc. but using the latter will underline the heterogeneity problem identified in 1 and 2. 

Nick 
n.j.cox@durham.ac.uk 

Matthias Opfinger

I want to estimate a panel model with observations on approx. 90 
countries for five points in time between 1980 and 2005. However, one of 
my explanatory variables is endogeneous. The only possible instrument is 
a variable on climatic zones. So it would be the same for each country 
over all points in time. How can I put this into my model? Do I just put 
the same value for each country over all the points in time and then use 
xtivreg?


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