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From |
Mohamud Hussein <Mohamud.Hussein@fera.gsi.gov.uk> |

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

Subject |
st: Fixed effects |

Date |
Wed, 6 Feb 2013 18:58:45 +0000 |

Dear All, I got in touch this morning to ask help on the problem below, but was later on informed that some of my notations(Greek alphabets) where unreadable, so I re-submit the problem: I would like to compare the cost-effectiveness of a regulatory regime used for inspections for two distinct groups of (small and large) firms. I intend to use a dummy (i.g287) coding for the (output) size of a firm and then compare two groups on the basis of differences in the intercepts and coefficients. Cit = mi + (beta)xit + zit(gamma) + nt + (epsilon)it. C= total cost of the inspection regime m=constant x= cost of the regime per unit of output z= Y_TCOST10, agr_score10 and enforcement10 (i.e. a set of other variables related to regulatory performance of a firm) n= dummy intercept(i.e. for i.g287). This is time-variant , allowing a firm to grow its operation from small to large scale in time. epsilon= error term I also added interactions with the dummy and run the model with intention of estimating directly both the coefficients for the group (dummy=0) and coefficients for the difference between the two groups. Output of the model (see below) suggest that there is no significant difference in the intercepts, but there is a significant difference in the coefficients for x and agr_score10. I am not quite sure of whether model is suitable for the comparison I am trying to make and, if so how to interpret the results? In particular, how I should interpret the insignificant difference in the intercepts and highly significant coefficients on interactions terms for variables x and agr_score10, bearing in mind that the dummy represent the size of a firm in a group in this case? Also, any particular issues that I need to pay an attention, if the model is does what I want? I will be happy to provide any additional information or explanation that may be necessary. . xtreg C i.gt287##c.x i.gt287##c.Y_TCOST10 i.gt287##c.agr_score10 i.gt287##c.enforcement10, fe Fixed-effects (within) regression Number of obs = 474 Group variable: my_id Number of groups = 94 R-sq: within = 0.5648 Obs per group: min = 1 between = 0.9508 avg = 5.0 overall = 0.9316 max = 8 F(9,371) = 53.50 corr(u_i, Xb) = 0.3923 Prob > F = 0.0000 --------------------------------------------------------------------------------------- C | Coef. Std. Err. t P>|t| [95% Conf. Interval] ----------------------+---------------------------------------------------------------- 1.gt287 | -34127.98 24120.31 -1.41 0.158 -81557.65 13301.69 x | .0066293 .0078059 0.85 0.396 -.0087201 .0219787 | gt287#c.x | | .4754795 .1637735 2.90 0.004 .1534387 .7975203 | Y_TCOST10 | .3695438 .502372 0.74 0.462 -.6183098 1.357398 | gt287#c.Y_TCOST10 | 1 | -.2244589 .5022651 -0.45 0.655 -1.212102 .7631844 | agr_score10 | -16.97173 18.80148 -0.90 0.367 -53.94256 19.99909 | gt287#c.agr_score10 | 1 | 109.7228 23.18021 4.73 0.000 64.14173 155.3039 | enforcement10 | -1.241843 31.77901 -0.04 0.969 -63.73141 61.24773 | gt287#c.enforcement10 | 1 | -7.497396 33.53713 -0.22 0.823 -73.4441 58.44931 | _m | 37718.32 19743.62 1.91 0.057 -1105.108 76541.75 ----------------------+---------------------------------------------------------------- sigma_u | 33442.826 sigma_e | 30638.016 rho | .54368618 (fraction of variance due to u_i) --------------------------------------------------------------------------------------- F test that all u_i=0: F(93, 371) = 4.62 Prob > F = 0.0000 Thanks, Mohamud The information contained in this message may include privileged, proprietary or confidential information. Please treat it with the same respect that you would expect for your own information. If you have received it in error, we apologise and ask that you contact the sender immediately and erase it from your computer. Thank you for your co-operation. The original of this email was scanned for viruses by the Government Secure Intranet virus scanning service. On leaving the GSi this email was certified virus free. * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/faqs/resources/statalist-faq/ * http://www.ats.ucla.edu/stat/stata/

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