Hi, I am running a panel regression and had an issue with collinearity. Can someone please give me ideas to deal with the same?
Dependent variable is ip growth for 5 countries of interest
Independent variables are world trade growth, oil price, ip growth in china, and ip growth in usa.
this was my regresion:
xtreg ip_growth world_trade oil_growth ip_china ip_us i.Country, fe
results:
note: 2.Country omitted because of collinearity
note: 3.Country omitted because of collinearity
note: 4.Country omitted because of collinearity
Fixed-effects (within) regression Number of obs = 76
Group variable: Country Number of groups = 4
R-sq: Obs per group:
within = 0.2621 min = 19
between = . avg = 19.0
overall = 0.2268 max = 19
F(4,68) = 6.04
corr(u_i, Xb) = 0.0000 Prob > F = 0.0003
------------------------------------------------------------------------------
ip_growth | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
world_trade | .1761989 .1008542 1.75 0.085 -.0250526 .3774504
oil_growth | -.0455904 .0347906 -1.31 0.194 -.115014 .0238332
ip_china | .1872247 .1602088 1.17 0.247 -.1324671 .5069164
ip_us | .1205812 .1888463 0.64 0.525 -.2562557 .497418
|
Country |
India | 0 (omitted)
Pakistan | 0 (omitted)
SouthAsia | 0 (omitted)
|
_cons | 3.523901 1.65905 2.12 0.037 .2133185 6.834483
-------------+----------------------------------------------------------------
sigma_u | 1.9464031
sigma_e | 3.8813336
rho | .20094615 (fraction of variance due to u_i)
------------------------------------------------------------------------------
F test that all u_i=0: F(3, 68) = 4.78 Prob > F = 0.0044
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