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Re: st: Levpet and Time Dummies.


From   "Brian P. Poi" <[email protected]>
To   [email protected]
Subject   Re: st: Levpet and Time Dummies.
Date   Wed, 20 Mar 2013 11:48:13 -0500

On 03/20/2013 10:34 AM, natasha agarwal wrote:

Dear All,

Please accept my apologies for the previous post.

I was attempting to calculate the TFP for a sample of firms for the
period 2001 to 2005 using the levpet command, and wanted to know if
one can use time dummies in the free variable list ?

Please note that levpet is a user written programme available as a
stata module by levinsohn and petrin in their co-authored paper in
2003. Stata Journal article of the
same can be accessed at
http://www.stata-journal.com/sjpdf.html?articlenum=st0060. The same
can be downloaded as ssc install levpet

Your help will be highly appreciated.

Many thanks,
Natasha

Natasha,

Rather than including time dummies in the model itself, what I would recommend is to fit your production function using -levpet- (without the time dummies) and obtain the estimates of productivity.  Then you can use graphs, descriptive statistics, etc., to see how the productivity evolves over time.  I suspect that if you include time dummies before obtaining the predicted productivity, you will have "swept under the rug" the interesting productivity dynamics these estimators are designed to help explore.


   -- Brian Poi
   -- [email protected]
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