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Fixing a variable to its initial value

Posted: Fri Feb 17, 2017 7:17 am
by rmitri
Hi there,

I'm doing my master thesis and studying the impact of debt on economic growth.

I'm working on a panel data of 12 european countries during the years 1991 - 2015.

I would like to set the GDP variable to its initial value (value in 1991) in order to test for conditionnal convergence across economies (higher (lower) initial value of GDP tends to lower (higher) economic growth). Do you know how to procede ?

Here is the equation I want to estimate :

y i,t = c + β0 lnGDP i,0 + β1 debt i,t + β2debt2 i,t + β3 gfcf i,t + β4 popgrowth i,t + ui + vt + Ɛi,t

But I can't find a way to fix the lnGDP variable to its initial value.

Could you please help me ?

Thanks a lot in advance

Re: Fixing a variable to its initial value

Posted: Fri Feb 17, 2017 10:56 am
by EViews Gareth
Something like:

Code: Select all

series fixedgdp = @meansby(gdp, @crossid, "1991 1991")

Re: Fixing a variable to its initial value

Posted: Fri Feb 17, 2017 8:24 pm
by rmitri
Thank you a lot !

It worked but I couldn't run the regression with fixed cross-section (near singular matrix error), do you know why ?

Re: Fixing a variable to its initial value

Posted: Sat Feb 18, 2017 8:04 am
by startz
Perfect multicollinearity. Each cross section already has a constant--that first observation.