Hi everyone!
I am researching for my thesis about the trade impact of non-tariff measures. For that, I am using the gravity model and the PPML estimator. However, I have some problems with it.
As I am using one exporter country and 50 importer countries, I have problems with the correct specification of importer fixed effects. When I include them in my model, several variables are omitted because they are captured by the fixed effect (I am using ppmlhdfe estimator). So, I was adviced about relaxing my importer fixed effects in order to get those omitted variables. However, it could be a mistake since I would be omitting the Multilateral Resistance mentioned in Anderson & Van Wincoop (2003). Searching more information about that, I found a paper by Nicita and Murina (2015) titled "Trading with conditions: The effect of sanitary and phytosanitary measures on the agricultural exports from low-income countries". In this paper, they do not show if they are including importer or exporter fixed effects (they only remarks that they use 2 digit fixed effects). Instead, they include a Multilateral Resistance variable which, I think, is substituting the importer or exporter fixed effects. So, I have some questions,
1) Is it correct to include a Multilateral Resistance variable instead of importer/exporter fixed effects? How can I get this variable in stata?
2) Does anybody read this paper? Could you explain me if the authors include exporter/importer fixed effects?
I attach a image with the results of that paper.
Pd: The study is about the impact of European measures on agricultural imports from low income countries in 2011 (cross sectional study)
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