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st: RE: re: calculating growth rates in a panel dataset

From   "Martin Weiss" <[email protected]>
To   <[email protected]>
Subject   st: RE: re: calculating growth rates in a panel dataset
Date   Mon, 13 Oct 2008 15:03:37 +0200

See [U] 11.4.3 and [U] 13.8 for further information on this approach...


-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Kit Baum
Sent: Monday, October 13, 2008 2:47 PM
To: [email protected]
Subject: st: re: calculating growth rates in a panel dataset

< >
Martin suggested

- bys id: g salesgrowth=(sales[_n]-sales[_n-1])/sales[_n-1]-

This works, but I spend some time every year when I lecture about  
panel data explaining to students why it is a Very Bad Idea to do so.

bys id: g salesgrowth = D.sales/L.sales
bys id: g salesgrowth = log(D.sales)

is a much safer way to do this, as the time-series operators will  
catch any issues with the time index (what if period 4 was not  
recorded for a given firm?). It requires that the data be -xtset- or - 
tsset-, and doing so will also catch some miscoding if the time index.  
Best to have Stata look for such mistakes in the process of data  
transformation. Very misleading results can be produced if you use  
explicit subscripts and the observation is completely missing (not  
Stata missing, but not recorded at all).

Kit Baum, Boston College Economics and DIW Berlin
An Introduction to Modern Econometrics Using Stata:

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