# Re: st: fixed effects with xtreg

 From Eva Poen <[email protected]> To [email protected] Subject Re: st: fixed effects with xtreg Date Fri, 12 Jun 2009 11:35:48 +0100

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Eleonora,

see the FAQ here: http://www.stata.com/support/faqs/stat/xtreg2.html

Hope this helps,
Eva

2009/6/11 Eleonora Bartoloni06 <[email protected]>:
> Hallo,
>
> Is there someone who can help me in interpreting correctly  the constant term in a xtreg procedure with fixed effects?
>
> I have estimated the following model:
>
> xtreg ros lros, fe
>
> I have obtained the following results:
>
>
> Fixed-effects (within) regression               Number of obs      =     18102
> Group variable: codice_i                        Number of groups   =      2586
>
> R-sq:  within  = 0.1347                         Obs per group: min =         7
>       between = 0.9609                                        avg =       7.0
>       overall = 0.6225                                        max =         7
>
>                                                F(1,15515)         =   2415.35
> corr(u_i, Xb)  = 0.7916                         Prob > F           =    0.0000
>
> ------------------------------------------------------------------------------
>         ros |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
> -------------+----------------------------------------------------------------
>         ros |
>         L1. |   .3752229   .0076348    49.15   0.000     .3602578     .390188
>       _cons |   6.288536   .0885829    70.99   0.000     6.114903    6.462169
> -------------+----------------------------------------------------------------
>     sigma_u |  3.7527417
>     sigma_e |  4.0508966
>         rho |  .46184853   (fraction of variance due to u_i)
> ------------------------------------------------------------------------------
> F test that all u_i=0:     F(2585, 15515) =     2.24         Prob > F = 0.0000
>
>
> I thought that the constant term (_cons=6.288536) was the average of the individual fixed effects.
>
> Instead, if i compute summary statistics of the fixed effects obtained by using the following command:
>
> summarize fe
>
> Ithe results are:
>
>    Variable |       Obs        Mean    Std. Dev.       Min        Max
> -------------+--------------------------------------------------------
>          fe |     18102    .0010154    3.752186  -20.95681   17.61897
>
> How is possible that the mean value of the fixed effects  (.0010154) is so different with respect to the constant term in the xtreg output?
>
> Which is the right interpretation of the constant term in the xtreg estimation with fixed effects?
>
> Thank you for the attention
> Eleonora Bartoloni

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