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Re: st: How to interpret time dummies in simple difference in difference regression


From   Milena Przheska <[email protected]>
To   [email protected]
Subject   Re: st: How to interpret time dummies in simple difference in difference regression
Date   Mon, 18 Nov 2013 13:43:39 +0100

On Mon, Nov 18, 2013 at 1:43 PM, Milena Przheska
<[email protected]> wrote:
> Here's what I think:
>
> You only need 2 dummy variables:
> - one that would indicate whether it is T&T or not, assuming that all
> your observations are about the two regions you mention, because if
> the dummy variable for T&T is zero, that would automatically mean that
> the region is Caribbean
> - and another dummy variable indicating whether it is before
> discovering resources or after.
>
> The estimates for each dummy variable will indicate the difference
> between regions and time period respectively. The interaction between
> the two dummy variables would tell you which combination is associated
> with higher/lower GDP, and contrast (command -pwcompare- ) as well as
> other post-estimation commands available in Stata will help you
> understand the results (search -help- for the post-estimation for the
> appropriate regression model).
>
> Also, I don't know if you have already consulted this site, but it it
> has helped me a lot.
>
> Hope this helps
>
> On Mon, Nov 18, 2013 at 1:24 PM, Melisa Haytasingh
> <[email protected]> wrote:
>> Hi guys,
>>
>> I'm doing a regression to analyse the difference between resource-rich
>> Trinidad & Tobago and their resource-poor Caribbean neighbour,
>> Barbados. I am treating resources (oil and gas) as the endogenous
>> variable and regressed GDP on 5 variables: a time trend, dummy taking
>> 1 for all observations for T&T before resources (before 1970), dummy
>> taking 1 after discovery of resources, dummy taking 1 for obs of
>> Barbados before 1970 and dummy taking 1 for obs of Barbados after
>> 1970. The regression looks like this in Stata:
>>
>> -          regression 1:
>>
>> reg gdp_percapita time TnT_no_resources TnTresources
>> barbados_before1970 barbados_after1970, nocons
>>
>> -          regression 2:
>>
>> reg inlfation time TnT_no_resources TnTresources barbados_before1970
>> barbados_after1970, nocons
>>
>>
>> I am having trouble figuring out how to interpret the results. I think
>> I need to find the difference between the coefficients like this:
>>  (barbados_before1970 - TnT_no_resources) and (barbados_after1970 -
>> TnTresources) and then compare those figures with each other. But I am
>> not sure. Also, I am not sure about how to interpret the coefficient
>> itself on each of the dummies. I tried to look for similar regressions
>> online and I got a better overall understanding but still confused
>> about how to interpret. :(
>>
>>
>> Thank you very much for any help.
>>
>>
>> Sincerely,
>>
>> Melisa
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