Hi all
I am tackling the effect of mobile money adoption (a binary variable) on firm-level energy intensity. Following the literature, I suspect that my model may be contaminated by endogeneity, so I run a fixed effect 2SLS model using xtivreg2. But what confuses me is that xtivreg2 runs on only 22 observations out of 800 under xtset firm_id year. When I read some posts here, I found a similar issue, and the proposed solution is to xtset only year. I followed the suggestion, and it worked perfectly for the whole sample, but I cant get the intuition behind xtivreg2 working with panel definition upon year variable only without accounting for firm time invariation? Should I include a firm fixed effect in the model in that case ?
Here is the code that I used
I am tackling the effect of mobile money adoption (a binary variable) on firm-level energy intensity. Following the literature, I suspect that my model may be contaminated by endogeneity, so I run a fixed effect 2SLS model using xtivreg2. But what confuses me is that xtivreg2 runs on only 22 observations out of 800 under xtset firm_id year. When I read some posts here, I found a similar issue, and the proposed solution is to xtset only year. I followed the suggestion, and it worked perfectly for the whole sample, but I cant get the intuition behind xtivreg2 working with panel definition upon year variable only without accounting for firm time invariation? Should I include a firm fixed effect in the model in that case ?
Here is the code that I used
Code:
xtivreg2 EE20152 finance_measure R_D human_capital labprod2015 exporter privatedomestic_ownership ln_age firm_sizeWBES industry_type (MM = new_var_2 ), fe endog (MM)
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