Dear Statalist,

I am wondering about the reasons behind adding more control variables in the panel regression?

For example , I want to investigate the impact of oil price shocks on trade balance using panel technique

My dependent variable: Trade balances
Explanatory variable: Oil price

Control variable 1: real growth of domestic product (RGDP)
Control variable 2: Real exchange rate (RER)

I found also some researchers add more control variables in the panel regression ?

Please any help statistically intuitions of why using the control variables beside the independent variables?


Thanks in Advance
Saberia
Greece