# Re: st: specifying j in Xijt

 From Kremena Platikanova <[email protected]> To [email protected] Subject Re: st: specifying j in Xijt Date Thu, 20 Apr 2006 09:54:22 -0600

Clive,

stand for i=importer country, j=exporter country, t=year.

My goal is to estimate (for multiple industries) the gravity equation:

Y_ijt=a+a_it+a_jt+a_ij+b1*X1_it+b2*X2_jt+b3*R_it+e_ijt

where Y=Imports, X_1it=importer characteristics, X2_jt=exporter
characteristics, R_it=reform dummy (=1 for the year of and the years following
the strengthening of intellectual property rights in the importer country).

But again my question is how to specify the variable corresponding to the
index j?

Kremena

Quoting CLIVE NICHOLAS:

Kremena Platikanova wrote:

> I have panel data of the form Xijt. I use
> iis [varnamei]
> iit [varnamet]
> to specify the variables corresponding to the indeces i and t,
> respectively.

Why, when you can use -tsset- instead (if you have Stata 8 or 9)? For example

. tsset varnamei varnamet

> But how do I specify the variable corresponding to the index j?

You really ought to tell us what exactly i and j are in your dataset.
Given that you're an economist, I might assume that i = firm and j =
country, but you should tell us that _explicitly_!

Assuming this is the case, -tsset- can only accept two dimensions. For
most mere mortals,

. tsset country year

would suffice, but you want to find a way of nesting firms within
countries, and that's quite tricky. The only solution I can think of would
be to

. bysort firm (country) : gen _n

and that doesn't really provide a satisfactory solution, as the index
numbers this would produce won't discriminate between either unit.

Perhaps a better, if not one-shot, solution would be to -tsset- for both i
and j seperately (along with t) and then include the variable left out as
a RHS variable in whatever model you're fitting.

Beyond that, I can't think of anything else, so I hope that helps (a bit).

CLIVE NICHOLAS        |t: 0(044)7903 397793
Politics              |e: [email protected]
Newcastle University  |http://www.ncl.ac.uk/geps

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