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st: difference between -xtreg, fe- and -areg, absorb- when adding the cluster option

From   natalie rebolledo <>
Subject   st: difference between -xtreg, fe- and -areg, absorb- when adding the cluster option
Date   Mon, 14 Jan 2013 19:11:10 -0300

Dear statalist users,

I'm trying to run a regression that accounts the influence of clusters
on the standard errors. I have been researching and I saw that there
are at least to basic solutions: one would be running an OLS with the
cluster option (-reg, cluster (clustervar)-) and a second option would
be -xtreg, fe i(groupvar)-. I have lots of clusters and observations
so I'm not too much worried about the assumption of assymptotic
consistency of this models.
The thing is that after my research I decided to go for the fixed
effect model and found out that this is equivalent to do -areg,
but I obtained different results between the two when I add the
cluster option, what I mean is that,

-xtreg, fe i(clustervar)- and -areg, absorb(clustervar)-  are
equivalent, but when I run
-xtreg, fe i(clustervar) cluster(clustervar)- and - areg,
absorb(clustervar) cluster(clustervar)-
I found the same coefficients but different standard errors, why is
that? shouldn't the standard errors be equal too?
and also, between those two models which one is the best to account
for the presence of clusters in my dataset?

Thanks in advance,
Natalie Rebolledo
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