Dear All,
I'm writing with probably simple question however, I'm really new in this topic and I really appreciate your help on this.
I'm working now on panel data model and try to estimate impact of indepvar on trade per provinces. I know that gravity model is the most popular method however, I want to use fixed effect model which in my case is: lntrade= lnindepvar+ c.year, fe robust
Usually in gravity model we use set of geographic controls such as GDP, distance etc however, in using fixed effects I assume that all those regional time-invariant variables are already catched by "fixed effects" My questions is regarding time fixed effects because once I include them I understand that all regional time-variant variables are also controlled. I'm a bit confused now because if basically time and region fixed effects control for all time variant and invariant factors my model should be already good however, I was wondering if I can include additional controls like GDP of region or it is already included in fixed effects ?
I'm sorry if this question is too simple but it is really important for me.
Many thanks,
Maria
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