HI,
I Think this Forum is so helpfullI , but now I am unable to find an answer about my problem.
I have a panel data set of bilateral tradeflows between EU Country and Africa between 20002016, resulting in about 476 crosssections. Everything works just fine, but I, like others, encounter the Near Singular Matrix problem while adding some dummies.
I constructed them in Estimate Equation, with the following command: log(export) c log(GDP) log(Pop) log(distance) @expand(Embargo, sea access, EU countries). In my Excel have I : 1 for Embargo and 0 for dosent Embargo's Country, 1 for Sea access and 0 for dont access to sea also 1 for affiliation to EU and 0 for dont affiliation to EU.
Is my command wrong? What is it the correcte command for Dummy Variable in Estimate Equation?
Hope you can help me
Thanks!
Dummy Variables
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 Nonnormality and collinearity are NOT problems!
 Posts: 3361
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Dummy Variables
Dummy variable trap. You can't have a constant and a complete set of dummies.
Re: Dummy Variables
that means I should use each variable separately in model and without constant?
for example:
log(export) log(gdb) log(pop) log(distance) @expand(Embargo)
is it correct?
for example:
log(export) log(gdb) log(pop) log(distance) @expand(Embargo)
is it correct?

 Nonnormality and collinearity are NOT problems!
 Posts: 3361
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Dummy Variables
That should work.
Re: Dummy Variables
Dummy Variables could not be logarithmiert?

 Nonnormality and collinearity are NOT problems!
 Posts: 3361
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Dummy Variables
A dummy variable is either 0 or 1.
Re: Dummy Variables
Hi,
I'm new to EViews, so apologies in advance if any of this is unclear. I'm in the midst of writing a finance dissertation, and need to run regressions with two dummy variables for some of my research.
I have the following series uploaded into EViews, all of which are sorted by the same dates (a 15 year daily time series): the daily average return of my sample, the daily dispersion of the returns measured using one method, and the daily dispersion of returns measured using a second method.
I want to determine whether, on days when the average/market return is extreme (top/bottom 1% or 5% of returns), dispersion increases or decreases (this is where two dummy variables comes into play), and how this differs for the two methods. I will run two separate regressions, one for each measure of dispersion. I've attached a picture of what my regression equation needs to look like (with an explanation of the dummy variables): .
I will want to run the regressions at least twice, with the 'extreme lower tail' being tested at both the 1st and 5th percentile, potentially 10th as well. S(t) in the equation attached is the level of dispersion corresponding to the same day as the return.
Is anyone able to help me figure out how to do so? It doesn't seem like it should be too complicated but I'm just not sure where/how to start. Sorry this is so long, but thanks for any help.
I'm new to EViews, so apologies in advance if any of this is unclear. I'm in the midst of writing a finance dissertation, and need to run regressions with two dummy variables for some of my research.
I have the following series uploaded into EViews, all of which are sorted by the same dates (a 15 year daily time series): the daily average return of my sample, the daily dispersion of the returns measured using one method, and the daily dispersion of returns measured using a second method.
I want to determine whether, on days when the average/market return is extreme (top/bottom 1% or 5% of returns), dispersion increases or decreases (this is where two dummy variables comes into play), and how this differs for the two methods. I will run two separate regressions, one for each measure of dispersion. I've attached a picture of what my regression equation needs to look like (with an explanation of the dummy variables): .
I will want to run the regressions at least twice, with the 'extreme lower tail' being tested at both the 1st and 5th percentile, potentially 10th as well. S(t) in the equation attached is the level of dispersion corresponding to the same day as the return.
Is anyone able to help me figure out how to do so? It doesn't seem like it should be too complicated but I'm just not sure where/how to start. Sorry this is so long, but thanks for any help.

 EViews Developer
 Posts: 270
 Joined: Thu Apr 25, 2013 7:48 pm
Re: Dummy Variables
Hello,
You should be able to create your desired dummy variables using variations of the following command. This example command creates a dummy for the extreme low returns at the 5% threshold (daily average returns in series x),
You should be able to create your desired dummy variables using variations of the following command. This example command creates a dummy for the extreme low returns at the 5% threshold (daily average returns in series x),
Code: Select all
series D_L_05 = @ranks(x) / @obssmpl < .05
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