Hello,
I have a dataset with several countries and quarterly values.
i' m running the following regression where i want to control for time (quarter) effects.
Xtrifreg Y X1 X2 X3, fe i(country_) q(10)
My doubt is that i don't understand the difference between the following issues to calculate the appropriate dummies:
1 - estimate the regression using only 4 dummies (one for each quarter). In that case i'll have: xtrifreg Y X1 X2 X3 dum1 dum2 dum3 dum4, fe i(country_) q(10)
2 - estimate the regression using several dummies for each quarter of each year. For example 1980q1, 1980q2, 1980q3, 1980q4, 1985q1, 1985q2 and so on. In that case I will have;
xtrifreg Y X1 X2 X3 dum1980q1 dum19080q2 dum1980q3 ...dum2013q1, fe i(country_) q(10).
Can you help me to understand the difference between these two approaches and which one is better to use?
thank you in advance.
best regards
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