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RE: st: fixed effects for unbalanced panel

From   "Rodrigo Alfaro A." <>
To   <>
Subject   RE: st: fixed effects for unbalanced panel
Date   Tue, 7 Oct 2008 11:32:49 -0400


Yes, Stata does that. We discussed with Mark that in the post mentioned
by Austin Nichols and also you could check the minimum number of
observations by groups in the examples of -xtreg, fe- in the manuals.
Best regards, Rodrigo.  

-----Mensaje original-----
[] En nombre de Deepak Hegde
Enviado el: Martes, 07 de Octubre de 2008 10:57 a.m.
Asunto: RE: st: fixed effects for unbalanced panel

It appears to me that areg/xtreg, in addition to not adjusting the
observations to account for singletons, is estimating the within
regressions with a bunch of zeros in X and Y (demeaning groups with only
one observation should yield zeros in X and Y).  This affects both the
slope and intercept of the regression line and can lead to coefficients
(not just S.E.) substantially different from the ones obtained by
explicitly dropping single-occurring observations from the fixed effects

Can someone please confirm if I am right in my thinking about how Stata
is treating single observation groups?  Thank you!

-----Original Message-----
[] On Behalf Of Austin
Sent: Tuesday, October 07, 2008 6:56 AM
Subject: Re: st: fixed effects for unbalanced panel


On Tue, Oct 7, 2008 at 1:29 AM, Deepak Hegde <>
> I have an unbalanced panel (for most firms, I have two or more years
of data, and for some firms only one year).
> I want to know what stata does to observations (firms) with only one
year of data when I run a fixed effects model with either the xtreg,
fe(firm_id) or areg, absorb (firm_id) command.  It seems like the
correct thing to do is to drop observations with only one year of data,
but I am getting different results when I explicitly exclude firms with
only one-year of data and when I use Stata's fixed effects commands.
This suggests that Stata is using data on firms without time-variation
in a way that I don't understand...
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