Hi
A little background first. I am trying to test how democracy levels impact GDP. I am using the data of 105 countries spanning a period of 26 years (1990-2016) using the Arellano-Bond Estimator (xtabond2). I am trying to put in a time dummy variable to take into account time fixed effect into account. For example the Global Financial Crisis of 2007 and others.
This is my initial code
xtabond2 loggdp l.loggdp polrisk l.popgrow logtrade govsp democracy, gmm (l.loggdp logtrade) iv(polrisk l.popgrow govsp democracy)
H1: Democracy leads to economic development.
xtabond2 loggdp l.loggdp polrisk l.popgrow logtrade govsp democracy, gmm (l.loggdp logtrade) iv(polrisk l.popgrow govsp democracy)
Variables
loggdp - log of GDP
polrisk - Political Risk
l.popgrow - lag of Population Growth
logtrade - log of Trade
govsp - Government Spending
democracy - signifies if the country was democratic or not in a particular year.
What is the command to create time dummy variables and where do I insert it in my formula.
Thank You
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