Re: [Gretl-users] fixed effects panel estimation
Hello,
thank you for your answer. The problem is that every literature
recommeds fixed effect model as a correct estimator. It is a gravity
equalition, therefore some county-specific variables remain and do not
chage over the time. However, they have a certain impact on the
variables.I cannot understand why could somebody deploy the same model
with similar data on the fixed effects estimator.Considering the
simplest gravity model using a set of countries with their GDP and
time fixed distance, it is not possible that the distance would be
omitted from the equation. However, there is a constant that captures
all fixed effects but if I need to know exact coefficient of distance,
or another variables,... I am simply lost.
I have not tried another software yet, because I always worked with
Gretl that is ver user friendly but now, I really do not know how to
solve my issue.
Anyway thank you for your advice and if you have any ideas, do not
hesitate to contact me
Iveta
On Fri, Jul 17, 2009 at 9:52 PM, Sven Schreiber<svetosch(a)gmx.net> wrote:
Am 17.07.2009 21:12, Iveta Paterova schrieb:
> Hello everybody,
> it may sound silly, but I simply cannot understand why when calculating
> fixed effects panel estimation, some variables are "omitted due to the
> collinearity" and the constant remains. Should not also constant disappear
> from the estimation - as it bears the fixed effects???
> I am calculating log-gravity models and the important variables are
> omitted. What do I do wrong?
> How can I get know the coefficient of omitted variables? IT IS IMPROTANT
> FOR MY ESTIMATION?
>
> Thank you for your help.
>
Iveta,
it sounds as if the omitted variables only vary in the cross-section
dimension, not over time. That you collinearity then is a general
problem of a fixed-effects specification, not of gretl's implementation.
You might try a random-effects model, but if that happens to be rejected
as biased, then you're out of luck. You would then need to think of a
different approach to get your coefficient estimates, probably by
checking out what textbooks like Wooldridge suggest.
good luck anyway,
sven
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