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Re: st: Levpet and Time Dummies.


From   natasha agarwal <agarwana2@googlemail.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: Levpet and Time Dummies.
Date   Sun, 24 Mar 2013 11:02:20 +0530

Dear All,

Many thanks for providing kind assistance.

I had a further query of this note.

I estimate the production function using "levpet" for each industry
and then I lump all the industries together and estimate one
production function for all. However, I get different results for the
predicted TFP when I look for each industry.

Can anyone please tell me why is this the case ?

Please note that levpet is a user written programme available as a
stata module 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

Best,
Natasha

On Wed, Mar 20, 2013 at 10:18 PM, Brian P. Poi <bpoi@stata.com> wrote:
> 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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