Rob and Sven,

My apologies, but I'm not at home, and having to use Comcast's badly written web email interface--it won't let me reply in-line to quotes.

OK, I see now why I'd want to use the panel approach, because, yes, I am hoping for homeogeneity--and the number of violent events per country may be so small that a country-by-country approach wouldn't have much power anyway. Do either of you have tips on where I could read up on panel and fixed-effects models?

Oh, and yeah, I know that at the moment I have too many endogenous variables and not enough exogenous ones to act as instruments--that's just a matter though of identifying the right variables, which is something I'm working on.

Scott

-------------- Original message --------------
From: Sven Schreiber <svetosch@gmx.net>

> Am 10.03.2008 23:57, Scott David Orr schrieb:
> > I took a class in causal modeling more than 10 years ago, and while I
> > thought I remembered the basics, since then all my work has been with
> > structural equation models, and I find I'm now a bit lost....
>

> You have my sympathy and understanding, but I doubt that there's any
> quick solution to your problem...
>
> >
> > Let me explain what I'm trying. Basically, I'm trying to test the
> > hypothesis that high levels of press freedom tend to prevent violent
> > ethnic conflict, because ethnic groups can fight things out in the
> > media. Therefore, the main effect I'm looking for is an effect of media
> > freedom and ethnic violence, and my guess is that effect will be a bit
> > lagged, though I'm not sure of that, and it's also possible that each
> > variable affects the other. I have data at least back to 1990 in many,
> > many countries for both of these, though I intend to do the tests just
> > in sub-Saharan Africa and post-Communist Europe.
> >
> > Other endogenous variables that could affect the equation would be
> > democ! racy (t he Freedom House political freedom score), unemployment, and
> > change in per-capita GDP. I'm working on figuring out exogenous
> > variables, but election years and possibly the presence of droughts look
> > good, and literacy rates (separately for men and women) might also be
> > useful.
> >
> > My question is, how do I frame this. Basically, I should have time
> > series data for each variable for each of the countries in question.
> > Each country could therefore be analyzed individually, but I'd ideally
> > expect patterns within particular regions, if not across regions. My
> > memory vaguely recalls that I want to use SURE or some kind of
> > simultaneous equations analysis, but I've been looking through the two
> > relevant texts I have (Gujarati, Third Edition, and Hamilton's Time
> > Series Analysis), and come to the conclusion that I'm! a lot less smart
> > than I thought I was, at least on this subject.
>
> The question is if you're ready to assume and then exploit some degree
> of homogeneity (equal parameter values) across countries. If so, you're
> in a panel context. If not, then you could use SURE. Country-per-country
> is also admissible, it's all a matter of efficiency and sample size.
>
> The bigger problem that I see is your set of endogenous explanatory
> variables, so you may have to use some instrumental-variables approach.
>
> >
> > Could anyone give me a few pointers? And if those pointers included
> > tips on setting this up in GRETL, that would also help.
>
> Putting all the ingredients together is definitely doable but is a
> full-fledged research project I'd say. As I said, I don't think there's
> a quick solution.
>
> One specific
> > questi! on I ha ve what do to with exogenous variables that don't vary much
> > over time. To wit, I'm suspect literacy rates play a role, but since
> > they don't change much over time, that roles should be seen across
> > countries rather than over time within countries (which is one reason a
> > multiple-country analysis would be useful).
>
> Yes then you need a panel analysis. However, those time-constant
> variables are hard (if not impossible) to distinguish from (other) fixed
> effects. So you would have to hope you don't need to use a fixed-effects
> model.
>
>
> cheers,
> sven
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