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st: bilateral panel data

From   Andreas Dimopoulos <[email protected]>
To   <[email protected]>
Subject   st: bilateral panel data
Date   Sun, 06 Apr 2014 23:19:44 +0100

Hi there,

I am dealing with bilateral data for a specific number of years.
Particularly, I have pairs of countries and the trade between them as well
as some country-specific characteristics such as the GDP of each country.
Some of the variables remain constant (e.g. distance between countries)
while others change. My data also consists of the reporter and the partner.
Therefore, as I have read from previous posts I generated a group by
variable using the command: "egen group=group(reporter partner), label".
Then, I did "xtset group year" and tried to run the xtreg between the
dependant variable (lntrade) and the relevant GDP values (lnGDPi, lnGDPj).
However, stata gives me the outcome 0 (omitted variable). I then checked
for the correlation between the explanatory variables and found that there
is no perfect collinearity. Hence, I do not know why stata keeps on giving
this omitted variable outcome.

Any ideas will be more than useful.

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