This will test whether the fixed-effects or random-effects model is more appropriate.
Before you can run a single regression, your data structure must be flawless. The "exclusive" secret to a clean workflow is mastering the xtset command and its validation counterparts. Beyond the Basics of xtset Most users know xtset id time . However, the pros use: xtset id time, delta(1) Use code with caution. stata panel data exclusive
* Levin-Lin-Chu test (assumes a common unit root process) xtunitroot llc log_gdp * Im-Pesaran-Shin test (allows for individual-specific unit root processes) xtunitroot ips log_gdp Use code with caution. Panel Cointegration Testing If your variables are found to be integrated of order one ( This will test whether the fixed-effects or random-effects
: This draws a time-series plot for each separate entity. Beyond the Basics of xtset Most users know xtset id time
* Start with pooled OLS (baseline) reg y x1 x2 i.year
* Estimate FE and store results xtreg y x1 x2, fe estimates store fe