Dear Statalist members,

I have a conceptual question regarding the use of xtreg, fe when the panel identifier id reflects a group variable [gen id=group(country firm)], thus the panel variable reflects firms nested within countries. Moreover, the time variable is years, and the sample spans 50 years. If I am not mistaken, when using xtreg, fe, this implies that the fixed effect that is included in the model is an interaction between the dummy variable country and firm. My question is now: if one would want to include only country-level and/or firm-level fixed effects (so without the interaction term), does that mean xtreg cannot be used?

Thank you for your help, it is much appreciated.

Best,

Jai