Dear researchers
I am calculating Gravity Equation. For the OLS everything goes normal but when taking a country id and time fixed effects then Distance goes wrong. Can anyone explain this how to make it negatively affect trade volume?
I have attached the screenshot of my equation and results.
Dear Micheal
Yes, it works. But is it okay to add only time fixed effect to control for multilateral resistance?
Can you please tell me how can i do that ... to make them in a group?
I am taking China as observer and trade with 132 countries (1993-2014).
Dear Michael
Thank you so much for your suggestions. How about if i separate my data into 3 groups such as developed, underdeveloped and least developed. Which one is more good to make 3 data files to handle each group separately or just put dummy variables for each group? If you have any better suggestions for me then please share.
Thank you
Actually, my full equation has some explanatory and dummy variables.
Total trade= constant+(GDPi*GDPj)+ (Diff.Per Capita GDPij)+ Distance+ Bilateral_Exchang_erates+ {Dummies (Language+WTO+FTA+Border+ landlock)
For OLS estimation everything is almost significant and excepted signs but when i take
(ID and Year) the fixed effect then most of the variables have gone insignificant and wrong signs. Maybe this time you understand my real issue.
My observer country is China and time(1993-2014).
Cite
Muhammad Saqib Irshad
Dear Saba
It's been a long I was facing the issue but solved it successfully. Kindly allow me to know more about your sample size and variable descriptions.
Best Wishes!
Dr. Saqib
Cite
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