Hi
Currently working on a panel data set, and are adjusting for firm fixed effects. However, I want to add a dummy for one specific country (Norway). This variable gets omitted (due to collinearity) when adding the dummy (1 if Norway, 0 if not). I understand that there can be collinearity, due to the fact that we adjust for firm specific effects, but is it a way to get around this problem? Furthermore, everything works fine when adjusting for year fixed effects (which seem plausible).
I'm currently using areg when adjusting for firm fixed effects, where I absorb the firm's gvkey (used as a dummy variable for each firm).
In advance, thank you for any help regarding this problem
Petter Hansen
Currently working on a panel data set, and are adjusting for firm fixed effects. However, I want to add a dummy for one specific country (Norway). This variable gets omitted (due to collinearity) when adding the dummy (1 if Norway, 0 if not). I understand that there can be collinearity, due to the fact that we adjust for firm specific effects, but is it a way to get around this problem? Furthermore, everything works fine when adjusting for year fixed effects (which seem plausible).
I'm currently using areg when adjusting for firm fixed effects, where I absorb the firm's gvkey (used as a dummy variable for each firm).
In advance, thank you for any help regarding this problem
Petter Hansen