st: time varying dummy variables in a fixed-effects regression

[bdeaton@uoguelph.ca]

Dear Statalisters,

I have two related questions: (1) how  does STATA tranform dummy  
variables, which change over time, in a fixed effects regression and  
(2) can I interpret the coefficient estimates for these dummy  
variables in a typical fashion � i.e., wrt the omitted dummy � or does  
the transformed variable require a different interpretation of the  
coefficient estimate.

A simplified version of the county-level fixed effects regression I am  
running is as follows:

xtreg  y d1 d2 d3  X t, fe

where:
 y is a continuous variable
d1..d3 represent time varying dummy variables with the omitted dummy  
being (d4).
X represents a vector of time varying continuous explanatory variables.
t represents a vector of time dummy variables.

I�d greatly appreciate your thoughts.

Sincerely,

Brady Deaton
Food, Agricultural and Resource Economics
University of Guelph
Canada





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