Hello,

I have cross sectional data with 26 groups. I estimated a probit and fracreg regression for my two research questions. Since my key explanatory variables varies at the group level, I added the dummies for group and clustered errors at group level as well. However, I estimated vif by running reg command with the same variables I used for probit and fracreg regression. The VIF is very high for my key explanatory variable (around 28,000) when I add group dummies. However, when I remove the dummies it is within the acceptable range (like 4 etc). Why is the multicollinearity high when I add dummies? How can I fix the issue?