Hello everyone,

I am currently writing my Master Thesis and I try to explore the effect of leaving a trade agreement on trade flows. Therefore I collected panel data from 2000-2013 for 2 different countries. My independent variable is imports and my dependent variable of interest is the dummy exitATPDEA, which turns 1 if the treatment applies. I am using HS-6 digit data and have the trade flows precisely for roughly 5500 product categories. My id grouping includes productcode and country.

My question: My professor recommended me to use the reghdfe command in stata to explore my independent and depend variable. However, when I run the following code:

reghdfe limports exitATPDEA i.year, absorb(id) vce(robust)

, I don't get significant results. When I do the same with the normal xtreg command my result are significant. What could be possible reasons for my insignificant results?

So far I have only come up with that I might have an unbalanced data set in which my treatment observations are underrepresented. Furthermore, I read that with reghdfe one should have more than 50 clustering groups. Since I am new to this, I do not know how many groups I have.

Overall, I am pretty lost with this approach since, even after reading up the paper by Correia and the help page, I do not seem to get the grip of why I need to apply reghdfe in my model.

I know that these questions are on the beginners level but I would anyway appreciate any comments on my post. Thank you so much in advance. Kind regards.






Array