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Re: st: Year Fixed Effect Interpretation

From   Maarten Buis <[email protected]>
To   [email protected]
Subject   Re: st: Year Fixed Effect Interpretation
Date   Fri, 9 Sep 2011 16:31:08 +0200

On Fri, Sep 9, 2011 at 3:30 PM, Venkiteshwaran, Vinod wrote:
> Thank you for your inputs. In the absence of a new variable that is collinear with the year dummies, what is effect of dropping two dummies, one on either end of the sample, as opposed to dropping two at the beginning or the end?

In that case you are constraining the two years to be equal, and the
remaining coefficients are differences with respect to this combined
reference category.

Warning: this interpretation does _not_ extend to your case where one
extra dummy was dropped due to multicolinearity, as that dummy is
"secretly" included as part of the variable with which the time dummy
was colinear. I guess you are still hoping for a way to separate the

Hope this helps,

Maarten L. Buis
Institut fuer Soziologie
Universitaet Tuebingen
Wilhelmstrasse 36
72074 Tuebingen
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