[Joao Santos Silva]

The specification of the model is up to you.

[Amani Smith]

Dear Joao Santos Silva ,

I hope you are doing well. I am a new member of this forum.

I am interested in estimating the impact of income inequalities within countries on bilateral trade flows within a group of countries. It appears that the "ppmlhdfe" command in Stata is currently ideal for estimating the gravity model. However, it is not surprising that using this command leads to the omission of importer and exporter inequality variables. I understand that these variables are unilateral and are likely collinear with the exporter-time, importer-time, and exporter-importer fixed effects.

Since I am interested in the coefficients of these variables, could you please provide recommendations for a high-quality estimation with ppml?

Thank you.

[Joao Santos Silva]

Dear Amani Smith,

Welcome to the forum.

The problem you have is not with the command but with the specification you are using. As you note, you cannot estimate the coefficients of country characteristics if you include importer-year and exporter-year fixed effects. So, you have to find a suitable specification, or change the topic of your work...

Best wishes,

Joao