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From | Maarten buis <maartenbuis@yahoo.co.uk> |
To | statalist@hsphsun2.harvard.edu |
Subject | Re: st: coldiag2 to check for collinearity. |
Date | Tue, 6 Jul 2010 00:44:37 -0700 (PDT) |
--- On Mon, 5/7/10, natasha agarwal wrote: > I issue the following commands > > xtreg lnrval lnk lnw lnvfdi y14-y18, fe vce(robust) > > Table 1. Intra-and/or-Inter-Industry FDI-induced > spillovers within a Province > Dependent Variable: Log of Value Added of Domestic Firms > > (1) (2) <snip> > Log of FDI > 0.294*** 0.022 > (0.013) (0.020) <snip> [model (1) without time dummies; model (2) is with time dumies, MB] > Joint Significance of Time Dummies > (F-test) 113.82*** > > > I understand that the highly significant coefficient on the > time dummies in the regression is because they are highly > collinear with lnvfdi as the results show above. The time dummies do what you wanted them to do: control for idiosyncratic changes over time (what economists call the business cycle). If you don't include the time dummies then most of those changes over time will be assigned to FDI. You wanted to control for that, and it turned out that there isn't any effect left. That is your result, whether you like it or not. By calling this collinearity, you suggest that somehow that effect still exist, but was hidden by some technical problem with a fancy name. This is not the case, your result is that FDI has very little (or no) effect. Hope this helps, Maarten -------------------------- Maarten L. Buis Institut fuer Soziologie Universitaet Tuebingen Wilhelmstrasse 36 72074 Tuebingen Germany http://www.maartenbuis.nl -------------------------- * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/