## Dummy Variable (near matrix error)

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rafrods
Posts: 5
Joined: Mon Apr 05, 2021 5:32 pm

### Dummy Variable (near matrix error)

Hello. I am estimating a regression between the GDP and social spending of municipalities and I am trying to insert a dummy variable for municipalities in the metropolitan region (municipalities in the metropolitan region = 1; municipalities outside the metropolitan region = 0). But Eviews is displaying the near matrix error message when I use a panel regression for fixed effects or random effects, and when I select neither effect, the error message does not appear. However, when I analyze the correlation matrix, it is clear that there is no perfect correlation between the dummy variable and the other variables in the equation. What could be causing this error?
Last edited by rafrods on Mon Apr 05, 2021 6:20 pm, edited 1 time in total.

EViews Gareth
Fe ddaethom, fe welon, fe amcangyfrifon
Posts: 12824
Joined: Tue Sep 16, 2008 5:38 pm

### Re: Dummy Variable (near matrix error)

Run this code:

Code: Select all

`wfcreate u 100series y=@nrndseries x1=@nrndseries x2=@nrndseries x3 = x1+x2group g x1 x2 x3show g.correquation eq1.ls y c x1 x2 x3`

rafrods
Posts: 5
Joined: Mon Apr 05, 2021 5:32 pm

### Re: Dummy Variable (near matrix error)

Hello Garreth, can I ask you two questions? The first is that I noticed, and edited my post, that the message near matrix error appears when I use a panel regression for fixed effects or random effects, but not when I select neither effect (effects specification; cross -section; none).

The other question is whether you could translate this command, considering that y = GDP; x1 = leducation; x2 = lhealth; and the dummy variable = dummyGV