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Re: st: specifying j in Xijt

From   "Clive Nicholas" <[email protected]>
To   [email protected]
Subject   Re: st: specifying j in Xijt
Date   Thu, 20 Apr 2006 23:44:50 +0100 (BST)

Kremena Platikanova replied:

> Thank you for your response.
> Here is a little more information about my panel data. The indeces in Xijt
> 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?

All you've done is restate the question, so I don't have that much more to
say to this.

One comment I will make is on your nesting of 'importer' nations into
'exporter' ones. Now, pardon me for being a part-time political scientist,
but that looks a bit suss to me. Conceptually, to me at any rate, they
exist on the same level. If, and only if, I'm correct on that, my
suggestion is the same: i.e., run -tsset- twice - once for the 'i-nations'
and once again for the 'e-nations' - and see whether any differences occur
in fitting the model you state above.

I rather think that there are more important estimation issues to consider
here, anyway (e.g., which panel model to use, fixed effects or
first-differences, are lags to be used, etc.), which will have probably
have greater impact on the findings of your model than how you should use

The fact that nobody else has yet posted a response to your query would
appear to suggest that this really is the only solution anybody can think
of, barring divine inspiration.

CLIVE NICHOLAS        |t: 0(044)7903 397793
Politics              |e: [email protected]
Newcastle University  |

Whereever you go and whatever you do, just remember this. No matter how
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