Dear colleagues,
I am augmenting a gravity model and estimate it with PPML (Common Language, Contiguity, GDP)
In my model, I have three indicators (Institutional Quality) and I want to estimate (among other controls such as Regional Trade Agreements) the bilateral trade effects (e.g. measured by exports):
EX = ß0 + ß1 * ln(GDPR) + ß2*Contiguity + ß3*CommonLanguage + ß4+InstitutionalQuality1+ß5*InstitutionalQuality 2 +ß6*InstitutionalQuality3
for country i and country j.
I assume country-specific and time-specific fixed effects.
How can I compare the coefficients of the variables InstitutionalQuality I II and III? They are all significant for both countries, e.g.
InsitutionalQuality1i = 0.003***
InsitutionalQuality1j = 0.001***
InsitutionalQuality2i = 0.303***
InsitutionalQuality2i = 0.503***
Can I say that the effects of InstiutionalQuality2 for both countries i and j are significantly positive and way larger than InstiutionalQuality1?
Is it possible to compare these coefficient from the regression output as long as they are in the same dimension (e.g. three indicators ranging all three from 0 to 3.)
Is there a statistical method to compare the effects coefficients after running the regression? Or any other approach to draw a conclusion about the relative strength of the effect suggested by the model?
Thanks a lot!
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