Hello everyone, I'm using Stata version 14.0. I'm actually trying to estimate the natural rate of unemployment in different countries and different time periods (21 countries during 21 years).
My database looks like this
cid (country id) time d_u (change in unemployment) d_inf (change in inflation) control variables
1 2000q1 0.038 0.08273 ...
1 2000q2 ... ... ...
1 ...
1 2020q4
... ... ... ... ...
21 2000q1 ... ... ...
... ... ... ... ...
21 2020q4 ... ... ...
The natural rate of unemployment being the point where unemployment doesn't cause inflation. So : dY = a + b*dX and set dY as 0, dX=-a/b
So what I would do is
code :
reg d_inf d_u i.cid i.cid##d_u i.time

I am not sure it is the right way to do it ...
Furthermore I would like to "extract" the coefficient to estimate the natural rate of unemployment
I would do it like that : gen b1=_b[_cid##d_u]
It gives me : invalid matrix stripe;
cid##d_u
r(198) ;
Is there another way to do it ?


To sum up : a) Is there a regression that would give me coefficient for each country on each time period for the effect of a change in unemployment on the change in inflation ?
b) How can I "get out" the coefficient results of the regression ?

Please do not hesitate to tell me if I need to give more details

Thank you
Sander De Rudder