On 03/20/2013 10:34 AM, natasha agarwal wrote:
Dear All,
Please accept my apologies for the previous post.
I was attempting to calculate the TFP for a sample of firms for the
period 2001 to 2005 using the levpet command, and wanted to know if
one can use time dummies in the free variable list ?
Please note that levpet is a user written programme available as a
stata module by levinsohn and petrin in their co-authored paper in
2003. Stata Journal article of the
same can be accessed at
http://www.stata-journal.com/sjpdf.html?articlenum=st0060. The same
can be downloaded as ssc install levpet
Your help will be highly appreciated.
Many thanks,
Natasha
Natasha,
Rather than including time dummies in the model itself, what I would recommend is to fit your production function using -levpet- (without the time dummies) and obtain the estimates of productivity. Then you can use graphs, descriptive statistics, etc., to see how the productivity evolves over time. I suspect that if you include time dummies before obtaining the predicted productivity, you will have "swept under the rug" the interesting productivity dynamics these estimators are designed to help explore.
-- Brian Poi
-- bpoi@stata.com
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