Hi!

We are struggling with high VIF's in our model (in which we are using panel data with our main explanatory variable as dummies), but can't seem to find out why that is. When checking for the relationship between our outcome and independent variables, they seem to point in the expected direction. As we run our regression however, many variables flips sign and turn insignificant. So we figured that it must be due to the high VIF's. When trying to identify which variables are causing these issues in an attempt to find a solution, we have looked at the correlation matrix but can't seem to find any particularly high correlations. Rather the opposite, they are very low. We've tried standardizing the control variables, but that did not help. As far as we can tell when running the calculating VIF's for the dummies, they do not seem to be the problem either.

Is this a structural issue in the sense that our model isn't good enough perhaps? We would very much appreciate some advice to point us in the right direction. However, we are also very new to Stata, so please don't hesitate to ask for clarification!

Many thanks in advance!