If you have an endogenous independent variable and a valid instrument, use xtivreg : xtivreg gdp unemployment (investment = interest_rate), fe Use code with caution. 6. Diagnostic Testing and Robust Standard Errors
If your dependent variable is binary (0 or 1), you cannot use linear xtreg . Stata offers panel logit and probit commands: stata panel data
// 1. Run and store Fixed Effects xtreg GDP inflation trade_openness, fe estimates store fe_model // 2. Run and store Random Effects xtreg GDP inflation trade_openness, re estimates store re_model // 3. Compare the models hausman fe_model re_model Use code with caution. If the p-value is significant ( If you have an endogenous independent variable and
Before running regressions, you must tell Stata that your data has a panel structure using the command. Stata offers panel logit and probit commands: // 1
The standard summarize command pools all observations together. To get a breakdown of the variation within units over time versus between different units, use xtsum : xtsum income Use code with caution. The output provides three distinct standard deviations: Variation across the entire pooled dataset.