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st: Quadratics and FD?

From   Lukas Borkowski <[email protected]>
To   [email protected]
Subject   st: Quadratics and FD?
Date   Mon, 9 Jul 2012 23:21:17 +0200

Dear all,

I use Stata 11.2 and work on a two period balanced panel. I try for ages to plot my key explanatory variable in a regression model in order to show graphically that there might be a turning point where the sign of my key explanatory changes. I want to compare these turning points over three categories of observations (ldc, lldc and sids). Now, the tricky thing is that I want to do that while controlling for unobserved fixed effects using the first differencing method suggested by Wooldridge (2002). I understand that the code for the pooled OLS estimator would be

qui reg lngdp_wb $controls c.pter##c.pter##(ldc lldc sids), vce(cluster id)
foreach var in $controls {
sum `var'
replace `var' = r(mean)
foreach var in ldc lldc sids {
qui replace ldc = 0
qui replace lldc = 0
qui replace sids = 0
qui replace `var' = 1
qui predict yhat_`var'
sort pter
twoway line yhat_ldc yhat_lldc yhat_sids pter 

but when replace the first line with -qui reg lngdp_wb D.($controls pter ldc lldc sids pter_ldc pter_lldc pter_sids pter2 pter2_ldc pter2_lldc pter2_sids), vce(cluster id)- then the plotter scat is total useless due to extrem volatilities.

Do you have any suggestions what I can do in order to work that out?


Lukas Borkowski

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