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st: Collinearity between country fixed effects and Dummies

From   ajjee <>
Subject   st: Collinearity between country fixed effects and Dummies
Date   Tue, 8 May 2012 06:46:11 -0700 (PDT)

Dear All

I have a panel dateset of European Union member states. I am using many
dummies in my regression which are colinear with country fixed effcts. 
Suppose I have 2 dummies: EMU ( if a country is a member of EMU, its is 1
otherwise 0); ECB_found (if  a country is from the 6 founding members of
ECB, its 1 otherwise 0 ). Suppose for France: EMU=1, ECB_found =1 and
country dummy is also 1. My results are fine and significant. Is there any
problem due to collinearity between the dummies and country fixed effects?

Thanks in advance


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