Dummy Variables

For technical questions regarding estimation of single equations, systems, VARs, Factor analysis and State Space Models in EViews. General econometric questions and advice should go in the Econometric Discussions forum.

Moderators: EViews Gareth, EViews Moderator

sarchi
Posts: 19
Joined: Wed Jan 24, 2018 9:10 am

Re: Dummy Variables

Postby sarchi » Tue Mar 06, 2018 7:40 am

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 2000-2016, resulting in about 476 cross-sections. 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!

startz
Non-normality and collinearity are NOT problems!
Posts: 3289
Joined: Wed Sep 17, 2008 2:25 pm

Re: Dummy Variables

Postby startz » Tue Mar 06, 2018 7:52 am

Dummy variable trap. You can't have a constant and a complete set of dummies.

sarchi
Posts: 19
Joined: Wed Jan 24, 2018 9:10 am

Re: Dummy Variables

Postby sarchi » Tue Mar 06, 2018 8:10 am

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?

startz
Non-normality and collinearity are NOT problems!
Posts: 3289
Joined: Wed Sep 17, 2008 2:25 pm

Re: Dummy Variables

Postby startz » Tue Mar 06, 2018 8:41 am

That should work.

sarchi
Posts: 19
Joined: Wed Jan 24, 2018 9:10 am

Re: Dummy Variables

Postby sarchi » Thu Mar 08, 2018 3:23 am

Dummy Variables could not be logarithmiert?

startz
Non-normality and collinearity are NOT problems!
Posts: 3289
Joined: Wed Sep 17, 2008 2:25 pm

Re: Dummy Variables

Postby startz » Thu Mar 08, 2018 7:03 am

A dummy variable is either 0 or 1.


Return to “Estimation”

Who is online

Users browsing this forum: No registered users and 3 guests