Hello everyone
I have a question about time dummies and time trend, I hope someone can help.
I have panel data set consists of T=27 and N=42
I am using fixed effects, random effects, ivreg2 with and without cluster errors.
Here “X” is my main explanatory variable and rest are controls. As I use only country dummies with other control variables then results are significantly negative (which is favorable), but when I also add time dummies then coefficients on my main variable becomes insignificant, yet using time-trend dummy with country dummies again provide favorable results.
I have used alternates for both dependent variable and my main explanatory variable but found similar pattern of results. My question is, can I use time trend as an alternate to time-dummies? I have searched for literature in similar topic area and found that they have either used time dummies or country dummies or even some of them did not used both time and country dummies, I did not found any paper (in similar area) where they have used both time and country dummies simultaneously. would it be reasonable to proceed with results obtained from only country dummies or with country dummies and time-trend?
Thanks a lot!


Results estimation with country dummies
Code:
(1) (2) (3) (4)
Fixed effects Random effects IVREG2 IVREG2(cluster err.)
X -0.013*** -0.013*** -0.064*** -0.064***
(0.0021) (0.0021) (0.0058) (0.0188)
lnpn_w 0.618*** 0.618*** 0.723*** 0.723***
(0.0208) (0.0208) (0.0276) (0.1127)
pse_w -0.013*** -0.013*** -0.013*** -0.013***
(0.0008) (0.0008) (0.0010) (0.0035)
religion 0.000 -1.013*** -1.060*** -1.060**
(0.0000) (0.1503) (0.1835) (0.4129)
L.polity2 -0.014*** -0.014*** -0.017*** -0.017
(0.0041) (0.0041) (0.0050) (0.0123)
L.gdpg_w -0.004 -0.004 -0.006* -0.006
(0.0027) (0.0027) (0.0033) (0.0042)
popd_w -0.002*** -0.002*** 0.003*** 0.003
(0.0006) (0.0006) (0.0009) (0.0036)
indep 0.012 0.044*** 0.044***
(0.0072) (0.0094) (0.0134)
2.colonyg -0.595*** 1.360*** 1.360
(0.1984) (0.3138) (1.0563)
3.colonyg -0.515** 0.813** 0.813
(0.2484) (0.3321) (1.1266)
4.colonyg -1.044*** 1.011*** 1.011
(0.2528) (0.3730) (1.1353)
5.colonyg -0.959*** 0.320 0.320
(0.2522) (0.3344) (1.1388)
6.colonyg -1.616*** 0.078 0.078
(0.2307) (0.3305) (1.2015)
2.ccode -0.526*** -1.158*** -1.158***
(0.1711) (0.2185) (0.3720)
3.ccode -0.283** 0.506*** 0.506
(0.1128) (0.1595) (0.3354)
4.ccode -0.582*** -0.672*** -0.672
(0.2020) (0.2468) (0.5241)
5.ccode -1.148*** -0.650*** -0.650**
(0.1197) (0.1548) (0.2894)
6.ccode -0.677*** 0.779*** 0.779
(0.1632) (0.2485) (0.6407)
7.ccode 0.119 -0.306** -0.306
(0.1192) (0.1519) (0.2231)
8.ccode -1.126*** -1.469*** -1.469***
(0.1260) (0.1578) (0.2405)
9.ccode 0.047 -0.357 -0.357
(0.2101) (0.2597) (0.5217)
10.ccode -1.885*** -2.900*** -2.900***
(0.2793) (0.3564) (0.8709)
11.ccode -1.180*** -0.036 -0.036
(0.2259) (0.2995) (1.0262)
12.ccode -0.224 -0.540** -0.540
(0.1957) (0.2411) (0.6245)
13.ccode -0.240** -0.386*** -0.386
(0.1218) (0.1494) (0.2503)
15.ccode -0.134 0.144 0.144
(0.1187) (0.1477) (0.2148)
17.ccode -0.625*** -0.634*** -0.634
(0.1276) (0.1557) (0.3943)
18.ccode -0.174 -0.474*** -0.474*
(0.1220) (0.1520) (0.2539)
19.ccode -0.135 -0.049 -0.049
(0.1497) (0.1829) (0.2412)
20.ccode 0.141 -0.271 -0.271
(0.1916) (0.2376) (0.4312)
21.ccode -0.631*** -0.768*** -0.768***
(0.1173) (0.1439) (0.2395)
22.ccode 0.622*** 1.249*** 1.249***
(0.1174) (0.1569) (0.2829)
23.ccode 0.189* 0.317** 0.317
(0.1114) (0.1366) (0.2080)
24.ccode -0.225* -0.243 -0.243
(0.1288) (0.1572) (0.3998)
25.ccode 0.769*** 0.127 0.127
(0.1293) (0.1709) (0.4158)
26.ccode 0.249 0.449* 0.449
(0.2107) (0.2581) (0.5582)
27.ccode -2.795*** -1.676*** -1.676**
(0.1507) (0.2165) (0.6721)
28.ccode 0.138 0.632 0.632
(0.4002) (0.4911) (1.6173)
29.ccode 0.941*** 0.926*** 0.926***
(0.1174) (0.1433) (0.2457)
30.ccode -0.027 1.241*** 1.241**
(0.1820) (0.2571) (0.6151)
31.ccode -0.612*** -0.707*** -0.707
(0.2067) (0.2525) (0.4854)
32.ccode 2.086*** 1.563*** 1.563**
(0.1497) (0.1904) (0.6354)
34.ccode -3.169*** -2.065*** -2.065**
(0.2357) (0.3090) (0.9537)
35.ccode 0.192 0.349 0.349
(0.1912) (0.2340) (0.4164)
37.ccode 1.548*** 3.249*** 3.249***
(0.2013) (0.3008) (0.7142)
39.ccode -0.082 -0.141 -0.141
(0.1302) (0.1590) (0.1996)
41.ccode 0.465*** -0.115 -0.115
(0.1445) (0.1861) (0.4616)
_cons 3.719*** 4.015*** -0.407 -0.407
(0.2201) (0.5093) (0.7682) (1.9079)
N 1134 1134 1134 1134
r2 0.494 0.968 0.968
r2_a 0.47 0.97 0.97
Results estimation with time and country dummies

Code:
(1) (2) (3) (4)
Fixed effects Random effects IVREG2 IVREG2(cluster err.)
X 0.001 0.001 0.012 0.012
(0.0020) (0.0020) (0.0145) (0.0468)
lnpn_w 0.828*** 0.828*** 0.818*** 0.818***
(0.0222) (0.0222) (0.0258) (0.0993)
pse_w -0.007*** -0.007*** -0.006*** -0.006*
(0.0008) (0.0008) (0.0012) (0.0036)
religion 0.000 -0.265* -0.234* -0.234
(0.0000) (0.1371) (0.1402) (0.3485)
L.polity2 0.007** 0.007** 0.009** 0.009
(0.0037) (0.0037) (0.0043) (0.0111)
L.gdpg_w -0.002 -0.002 -0.002 -0.002
(0.0024) (0.0024) (0.0023) (0.0028)
popd_w 0.002*** 0.002*** 0.002** 0.002
(0.0006) (0.0006) (0.0008) (0.0040)
indep -0.004 -0.012 -0.012
(0.0062) (0.0119) (0.0315)
1992.year -0.077 -0.077 -0.077 -0.077***
(0.0732) (0.0732) (0.0719) (0.0288)
1993.year -0.146** -0.146** -0.145** -0.145***
(0.0743) (0.0743) (0.0730) (0.0479)
1994.year -0.206*** -0.206*** -0.201*** -0.201***
(0.0754) (0.0754) (0.0743) (0.0641)
1995.year -0.244*** -0.244*** -0.238*** -0.238***
(0.0763) (0.0763) (0.0754) (0.0769)
1996.year -0.291*** -0.291*** -0.276*** -0.276**
(0.0775) (0.0775) (0.0783) (0.1084)
1997.year -0.332*** -0.332*** -0.325*** -0.325***
(0.0785) (0.0785) (0.0777) (0.1061)
1998.year -0.395*** -0.395*** -0.391*** -0.391***
(0.0792) (0.0792) (0.0779) (0.1109)
1999.year -0.462*** -0.462*** -0.458*** -0.458***
(0.0800) (0.0800) (0.0787) (0.1256)
2000.year -0.496*** -0.496*** -0.494*** -0.494***
(0.0811) (0.0811) (0.0796) (0.1330)
2001.year -0.538*** -0.538*** -0.538*** -0.538***
(0.0822) (0.0822) (0.0807) (0.1377)
2002.year -0.607*** -0.607*** -0.620*** -0.620***
(0.0834) (0.0834) (0.0834) (0.1417)
2003.year -0.700*** -0.700*** -0.717*** -0.717***
(0.0845) (0.0845) (0.0858) (0.1515)
2004.year -0.779*** -0.779*** -0.787*** -0.787***
(0.0849) (0.0849) (0.0839) (0.1656)
2005.year -0.842*** -0.842*** -0.854*** -0.854***
(0.0859) (0.0859) (0.0857) (0.1691)
2006.year -0.881*** -0.881*** -0.899*** -0.899***
(0.0865) (0.0865) (0.0878) (0.1689)
2007.year -0.928*** -0.928*** -0.961*** -0.961***
(0.0873) (0.0873) (0.0957) (0.1781)
2008.year -0.988*** -0.988*** -1.035*** -1.035***
(0.0880) (0.0880) (0.1053) (0.2027)
2009.year -1.051*** -1.051*** -1.109*** -1.109***
(0.0883) (0.0883) (0.1140) (0.2317)
2010.year -1.101*** -1.101*** -1.163*** -1.163***
(0.0886) (0.0886) (0.1181) (0.2455)
2011.year -1.114*** -1.114*** -1.188*** -1.188***
(0.0899) (0.0899) (0.1292) (0.2804)
2012.year -1.138*** -1.138*** -1.219*** -1.219***
(0.0907) (0.0907) (0.1368) (0.3047)
2013.year -1.164*** -1.164*** -1.252*** -1.252***
(0.0911) (0.0911) (0.1442) (0.3287)
2014.year -1.200*** -1.200*** -1.294*** -1.294***
(0.0919) (0.0919) (0.1505) (0.3496)
2015.year -1.242*** -1.242*** -1.346*** -1.346***
(0.0929) (0.0929) (0.1618) (0.3858)
2016.year -1.290*** -1.290*** -1.389*** -1.389***
(0.0933) (0.0933) (0.1569) (0.3697)
2017.year -1.352*** -1.352*** -1.441*** -1.441***
(0.0934) (0.0934) (0.1467) (0.3365)
2.colonyg 0.501*** 0.247 0.247
(0.1759) (0.3683) (1.4945)
3.colonyg 0.755*** 0.679*** 0.679
(0.2207) (0.2375) (1.1131)
4.colonyg -0.255 -0.528 -0.528
(0.2173) (0.4110) (1.5514)
5.colonyg 1.177*** 1.166*** 1.166
(0.2362) (0.2322) (1.0290)
6.colonyg 0.757*** 0.666*** 0.666
(0.2254) (0.2503) (1.2043)
2.ccode 0.076 0.262 0.262
(0.1481) (0.2795) (0.7095)
3.ccode -0.250*** -0.409* -0.409
(0.0966) (0.2247) (0.7145)
4.ccode -0.731*** -0.665*** -0.665
(0.1781) (0.1948) (0.4904)
5.ccode -0.817*** -0.874*** -0.874**
(0.1025) (0.1242) (0.3553)
6.ccode -1.314*** -1.690*** -1.690
(0.1470) (0.5042) (1.5754)
7.ccode 0.474*** 0.609*** 0.609
(0.1038) (0.2007) (0.5474)
8.ccode -0.344*** -0.185 -0.185
(0.1140) (0.2327) (0.6072)
9.ccode 0.228 0.388 0.388
(0.1854) (0.2739) (0.7441)
10.ccode -1.723*** -1.560*** -1.560*
(0.2378) (0.3132) (0.9248)
11.ccode 0.434** 0.411** 0.411
(0.2067) (0.2049) (0.9647)
12.ccode 0.710*** 0.842*** 0.842
(0.1719) (0.2398) (0.5624)
13.ccode -0.118 -0.052 -0.052
(0.1054) (0.1336) (0.3153)
15.ccode 0.222** 0.166 0.166
(0.1066) (0.1268) (0.2893)
17.ccode 0.073 0.138 0.138
(0.1131) (0.1385) (0.3430)
18.ccode -0.274*** -0.244** -0.244
(0.1037) (0.1092) (0.2738)
19.ccode -0.365*** -0.425*** -0.425
(0.1281) (0.1476) (0.2907)
20.ccode 0.282* 0.429* 0.429
(0.1683) (0.2510) (0.6651)
21.ccode -0.560*** -0.545*** -0.545***
(0.0999) (0.1001) (0.1767)
22.ccode 0.032 -0.146 -0.146
(0.1032) (0.2494) (0.6940)
23.ccode 0.086 0.032 0.032
(0.0957) (0.1171) (0.2659)
24.ccode 0.482*** 0.545*** 0.545*
(0.1142) (0.1385) (0.3048)
25.ccode -0.028 0.006 0.006
(0.1156) (0.1217) (0.4222)
26.ccode 0.239 0.266 0.266
(0.1848) (0.1846) (0.4793)
27.ccode -1.159*** -1.258*** -1.258*
(0.1547) (0.1980) (0.7526)
28.ccode -1.893*** -2.307*** -2.307
(0.3651) (0.6419) (2.0185)
29.ccode 0.165 0.123 0.123
(0.1085) (0.1190) (0.2280)
30.ccode 0.159 -0.078 -0.078
(0.1557) (0.3404) (1.1152)
31.ccode -0.281 -0.171 -0.171
(0.1816) (0.2271) (0.5612)
32.ccode 0.502*** 0.495*** 0.495
(0.1523) (0.1497) (0.4660)
34.ccode -2.716*** -2.986*** -2.986**
(0.2187) (0.4077) (1.3239)
35.ccode 0.035 0.042 0.042
(0.1665) (0.1637) (0.3526)
37.ccode 0.708*** 0.323 0.323
(0.1752) (0.5241) (1.6380)
39.ccode -0.193* -0.195* -0.195
(0.1102) (0.1082) (0.1289)
41.ccode -0.141 -0.102 -0.102
(0.1257) (0.1331) (0.4565)
_cons 0.794*** 0.709 1.309 1.309
(0.2426) (0.4683) (0.8978) (3.1182)
N 1134 1134 1134 1134
r2 0.647 0.985 0.985
r2_a 0.62 0.98 0.98
Results Estimation with Time trend and country dummies
Code:
(1) (2) (3) (4)
Fixed effects Random effects IVREG2 IVREG2(cluster err.)
X -0.004* -0.004* -0.038*** -0.038*
(0.0020) (0.0020) (0.0075) (0.0208)
lnpn_w 0.671*** 0.671*** 0.712*** 0.712***
(0.0195) (0.0195) (0.0230) (0.0897)
pse_w -0.010*** -0.010*** -0.011*** -0.011***
(0.0008) (0.0008) (0.0010) (0.0029)
religion 0.000 -0.826*** -0.929*** -0.929**
(0.0000) (0.1389) (0.1539) (0.3698)
L.polity2 -0.007* -0.007* -0.011*** -0.011
(0.0038) (0.0038) (0.0043) (0.0097)
L.gdpg_w -0.003 -0.003 -0.005* -0.005
(0.0025) (0.0025) (0.0028) (0.0035)
popd_w -0.000 -0.000 0.002** 0.002
(0.0006) (0.0006) (0.0008) (0.0035)
indep 0.001 0.024*** 0.024*
(0.0067) (0.0088) (0.0148)
Time trend dummy -0.446*** -0.446*** -0.266*** -0.266***
(0.0317) (0.0317) (0.0512) (0.1023)
2.colonyg -0.135 0.831*** 0.831
(0.1855) (0.2867) (1.0396)
3.colonyg 0.219 0.705** 0.705
(0.2344) (0.2765) (1.0840)
4.colonyg -0.607*** 0.427 0.427
(0.2346) (0.3361) (1.1372)
5.colonyg 0.093 0.422 0.422
(0.2438) (0.2762) (1.0750)
6.colonyg -0.572** 0.005 0.005
(0.2249) (0.2746) (1.1259)
2.ccode -0.172 -0.687*** -0.687*
(0.1594) (0.2054) (0.3829)
3.ccode -0.359*** 0.137 0.137
(0.1039) (0.1541) (0.3210)
4.ccode -0.398** -0.525** -0.525
(0.1863) (0.2062) (0.4466)
5.ccode -0.974*** -0.750*** -0.750***
(0.1109) (0.1303) (0.2654)
6.ccode -1.209*** -0.136 -0.136
(0.1548) (0.2812) (0.6198)
7.ccode 0.389*** 0.029 0.029
(0.1114) (0.1434) (0.2223)
8.ccode -0.648*** -1.043*** -1.043***
(0.1208) (0.1562) (0.2652)
9.ccode 0.397** 0.018 0.018
(0.1949) (0.2280) (0.4679)
10.ccode -1.925*** -2.507*** -2.507***
(0.2570) (0.3071) (0.8275)
11.ccode -0.317 0.009 0.009
(0.2167) (0.2474) (0.9913)
12.ccode 0.149 -0.188 -0.188
(0.1820) (0.2117) (0.5493)
13.ccode -0.054 -0.215* -0.215
(0.1128) (0.1283) (0.2028)
15.ccode -0.122 0.037 0.037
(0.1093) (0.1244) (0.1798)
17.ccode -0.330*** -0.454*** -0.454
(0.1192) (0.1334) (0.3566)
18.ccode -0.264** -0.405*** -0.405*
(0.1124) (0.1268) (0.2462)
19.ccode -0.322** -0.196 -0.196
(0.1384) (0.1541) (0.2312)
20.ccode 0.440** 0.076 0.076
(0.1775) (0.2091) (0.3849)
21.ccode -0.656*** -0.727*** -0.727***
(0.1079) (0.1193) (0.2092)
22.ccode 0.309*** 0.805*** 0.805**
(0.1103) (0.1593) (0.3147)
23.ccode 0.051 0.182 0.182
(0.1030) (0.1162) (0.1748)
24.ccode 0.074 -0.057 -0.057
(0.1204) (0.1349) (0.3463)
25.ccode 0.367*** 0.151 0.151
(0.1224) (0.1417) (0.3966)
26.ccode 0.486** 0.508** 0.508
(0.1946) (0.2136) (0.5079)
27.ccode -2.225*** -1.796*** -1.796***
(0.1444) (0.1821) (0.5761)
28.ccode -1.286*** -0.420 -0.420
(0.3818) (0.4563) (1.5422)
29.ccode 0.684*** 0.779*** 0.779***
(0.1095) (0.1218) (0.2174)
30.ccode -0.064 0.698*** 0.698
(0.1675) (0.2431) (0.5562)
31.ccode -0.210 -0.429** -0.429
(0.1923) (0.2159) (0.4373)
32.ccode 1.527*** 1.445*** 1.445***
(0.1433) (0.1582) (0.5266)
34.ccode -3.406*** -2.660*** -2.660***
(0.2175) (0.2851) (0.7795)
35.ccode 0.307* 0.353* 0.353
(0.1761) (0.1935) (0.3771)
37.ccode 1.137*** 2.305*** 2.305***
(0.1875) (0.3192) (0.7490)
39.ccode -0.133 -0.148 -0.148
(0.1198) (0.1315) (0.1643)
41.ccode 0.155 -0.062 -0.062
(0.1348) (0.1547) (0.4277)
_cons 2.591*** 2.907*** 0.748 0.748
(0.2178) (0.4751) (0.6893) (1.8020)
N 1134 1134 1134 1134
r2 0.572 0.978 0.978
r2_a 0.55 0.98 0.98