Dear all:
I use fixed-effect threshold model to study the effect of aid on FDI. The data is yearly with 1 year delay for control variables and variable of interest to avoid posible endogeneity problem.
Recently, I've read some relevant studies in which the authors use 3- or 5-year interval to estimate the effect. So I would like to test with my sample.
The original sample covers from 2003 to 2016 and I remove the data for 2003 and 2004, thus it can be divided into 4-year interval. 2005-2008(t1), 2009-2012(t2) and 2013-2016(t3).
My question is that by applying 4-year interval, the endogeneity problem will still existe? And if it exists, the new retarded variable now refers to t-1 not year-1? That is to say, I have generate retarded variable by: gen Xr4=l4.X ?
Thanks
Dongni
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