controlling variables in panel data

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mosib74
Posts: 2
Joined: Sun Dec 02, 2012 11:32 pm

controlling variables in panel data

Postby mosib74 » Sun Dec 16, 2012 12:14 am

I am working on the Chinese economy and I want to estimate the Chinese export demand function for 1988-2011 with more than 130 countries. I want to estimate the regression equation given below.
log(export)it=β0+β1log(realgdp)it+β2log(population)it+β3politicalstabilityit+β4realexchangerateit+εit
Where log(export)it is the (log) of the export from china to other countries and t=1988,…,2011.
my research, I want to control for the effect of Chinese GDP and population on Chinese export in EViews 7 in a panel estimation. without controlling for these two variables I can run a panel estimation in EViews but when i try torun my estimation with control variables eviews give the error(singular matrix). Any help is greatly appreciated.
malik fahim

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

Re: controlling variables in panel data

Postby EViews Gareth » Mon Dec 17, 2012 8:41 am

Dummy variable trap.

mosib74
Posts: 2
Joined: Sun Dec 02, 2012 11:32 pm

Re: controlling variables in panel data

Postby mosib74 » Mon Dec 17, 2012 7:39 pm

can you please let me know how can i solve this problem.

EViews Gareth
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Posts: 13604
Joined: Tue Sep 16, 2008 5:38 pm

Re: controlling variables in panel data

Postby EViews Gareth » Mon Dec 17, 2012 8:15 pm

Drop one of your dummies.


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