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st: Fixed effects - not quite invariant variables?


From   fernando luiz mistura <f_mistura@hotmail.com>
To   Stata <statalist@hsphsun2.harvard.edu>
Subject   st: Fixed effects - not quite invariant variables?
Date   Mon, 15 Oct 2012 08:17:11 +0000

Hi,
I have an unbalanced panel data with 180 observations. Data is for 56 countries for the years 1997, 2003, 2006, 2010. I want to see what is the effect of an Index variable of FDI restrictions that ranges between 0 and 1 in the level of countries' FDI. Under Pooled OLS and Random Effects, the index variable is significant as expected.
My problem is with fixed effects. The index variable for some contries do not change, as countries have liberalised in a period earlier that the one covered. For other countries, there are either small or large changes. Hence, under Fixed Effects however, the Index variable is not significant and the coefficients smaller. 
Could someone please explain me if the FE would still be appropriate even with this type of semi-variant variable? And if this issue could be addressed with an Instrumentral variable approach (hausmann taylor) even if its not a endogenous variable?
Many thanks
Fernando  		 	   		  
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