Dear all
I am evaluating the effect on american imports of the trade war dispute between China and the US.
I am using the reghdfe and ppmlhdfe and my question relates to in which dimensions I should cluster my standard errors.
Question 1:
Firstly, I want to evaluate the effects of the different tariff rounds for american imports from China (Products subject to a tariff compared to those not subject to tarif). E.i my dimensions in the panel data are product and time. Additional I control for seasonality of products by interacting product fixed effect with month fixed effect (i.product#i.month)
Should I then cluster my standard errors on both time, products and seasonality or only products with seasonality or products without seasonality?
To clarify, which one of these are the most appropriate and why?
A) ppmlhdfe Y X, abs(i.product#i.month i.time) vce(cluster i.product#i.month i.time)
B) ppmlhdfe Y X, abs(i.product#i.month i.time) vce(cluster i.product#i.month)
C) ppmlhdfe Y X, abs(i.product#i.month i.time) vce(cluster i.product)
Y = American imports from China
X = Tariff rounds
Question 2:
Secondly, I want to evaluate the "indirect" effect of the different tariff rounds for american imports from EU countries. My panel data have now three dimensions: Exporter, Product and Time.
I still control for seasonality for a product in a specific country. (i.exporter#i.product#i.month)
Again how should I correctly cluster my standard errors and why:
A) ppmlhdfe Y X, abs(i.exporter#i.product#i.month i.time) vce(cluster i.exporter#i.product#i.month i.time)
B) ppmlhdfe Y X, abs(i.exporter#i.product#i.month i.time) vce(cluster i.exporter#i.product#i.month)
C) ppmlhdfe Y X, abs(i.exporter#i.product#i.month i.time) vce(cluster i.exporter#i.product)
Y = American imports from EU country i
X = Tariff rounds
Dear Joao Santos Silva I have been following you in the attempt to find an answer on these questions. But unfortunately have not been able to find it so far. However, I believe that you might be able to answer this question?
Thank you in advance
Best
Rasmus
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