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st: Coding for fixed effects

From   "M.H.Hussein" <>
To   "" <>
Subject   st: Coding for fixed effects
Date   Fri, 8 Feb 2013 16:47:38 +0000


I would like to compare the cost-effectiveness of inspection regime used for enforcement of regulatory rule in two distinct groups of (small and large) firms. I intend to use a dummy (i.g287) coding for the (output) size of a firm to distinguish the two groups and then compare them on the basis of differences in the intercepts and coefficients.

I am using the following panel model:

Cit = mi + (beta)xit + zit(gamma) + nt + (epsilon)it.


C= total cost of the inspection regime

m=group specific constant term

x= cost of the regime per unit of output

z= a set of other variables related to regulatory performance of a firm, including charges applied to firm inspections, its compliance records and enforcement action taken against it for any breaches of the rule

n= dummy intercept(for i.g287). This is time-variant , allowing a firm to grow its operation from small to large scale in time.

epsilon= error term

Can you please tell me how I can implement this model in Stata12, so that I can estimate simultaneously the coefficients for the group (dummy=0) and coefficients for the difference between the two groups.

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