dummy variable for panel data

[lamia.donia]

hello,

I want to create a dummy variable for panel estimation. a dummy for the legal origin of the cross sections which are either french or english legal origin.

1- what are the steps to create dummy variable?
2- should I use one dummy variable or two for each category?
3- in case of one or two dummies; the coding of the dummy variable 1 and 0 or 1 for french and 2 for english for example?

[EViews Esther]

Code: Select all

smpl @all series dum=0 smpl if legal="French" dum=1 smpl if legal="English" dum=2 smpl @all

[startz]

Code: Select all

smpl @all series dum=0 smpl if legal="French" dum=1 smpl if legal="English" dum=2 smpl @all

Uh no. This is correct EViews code, but it's not a dummy variable. A dummy variable must be coded 0/1. You probably need two of them.

[EViews Esther]

Yes, I just give an example to make a dummy with (0), 1, or 2 depending on the legal origin condition.

As an example,

Code: Select all

series dum = 0 smpl if legal = "English" dum = 1

will produce a dummy with 1 if legal = English, 0 otherwise.

[lamia.donia]

thank you,

i created two dummies one for french and one for english but i get an error message: near singular matrix??

[startz]

Google "dummy variable trap."

[econworker]

Dear Startz

I have a question regarding the dummy variable in panel data.
I have a panel data which I want to estimate with PMG estimation. The friequency is weekly, however I included annual dummies, something like : my data is 1998 to 2014, so its 17 years weekly data and I created 17 dummy variables that takes value of one for each year and for all the cross sections. But the strange issue is that when I include the Whole annual dummy variables (17 ìannual dummies) it doesnt make any multicolinearity with constant, however when I do the same estimation with stata it drops the dummy of 1998, would you tell what is the reason for that result in Eviews?

Thank you

[startz]

No idea. You might post your EViews workfile including the equation you are estimating.