Dear Yostina, it seems you are looking for a gravity model (with country pairs) adjusted with fixed effects. If that is the case, have a look at this manual (Chapter 3). It has a nice discussion of models and STATA commands. Best.

https://www.unescap.org/resources/gravity-model-international-trade-user-guide-updated-version

To create exporter/importer fixed effects, you first need to understand what fixed effects are. Fixed effects refer to the unobserved heterogeneity or variation across different groups or entities in a dataset that remain constant over time. In the case of exporter/importer fixed effects, we are interested in identifying the unobserved differences across different exporting or importing countries that remain constant over time.

To create exporter/importer fixed effects, you can follow these steps:

1) Start with a panel dataset that includes information on exporting/importing countries, their exports/imports, and other relevant variables over time.

2) Identify the exporter/importer variable in the dataset. This variable should be a categorical variable that identifies each exporter/importer country in the dataset.

3) Create dummy variables for each exporter/importer country in the dataset. This involves creating a binary variable for each exporter/importer country that takes the value 1 if the observation corresponds to that particular country and 0 otherwise.

4) Include these exporter/importer dummy variables in your regression model along with other relevant independent variables. This will allow you to estimate the effect of each exporter/importer country on the dependent variable while controlling for other observed factors that may affect the outcome.

5) Interpret the coefficients of the exporter/importer dummy variables as fixed effects. The coefficient of each dummy variable represents the average difference in the dependent variable between the country corresponding to that dummy variable and a reference firm (usually the first country in the dataset) that is not included in the regression equation.

6) Use statistical software such as Stata, R, or Python to estimate the exporter/importer fixed effects using panel data techniques such as fixed effects regression, random effects regression, or first-difference regression.

It's important to note that creating fixed effects requires a panel dataset, which means that you have observations on the same entities over multiple time periods. Additionally, fixed effects models can be computationally intensive, so it's important to have a sufficiently large dataset and to use appropriate methods to handle issues such as heteroscedasticity, serial correlation, and endogeneity.

@Yostina Girgies

To create exporter/importer fixed effects, you can follow these steps:

It's worth noting that implementing fixed effects models requires a solid understanding of econometric techniques and statistical software. If you are not familiar with these methods, consulting with a statistician or econometrician would be beneficial. Additionally, specific software packages like Stata, R, or Python's statsmodels can help in estimating fixed effects models.