Hi everyone,
I have a question on how to run a placebo test in STATA.
I have read the following entry from the STATA Forum, but I am unsure the same framework applies to my case.
I am running a model to explain the role of experience on adoption of a strategy.
I have several control variables on the RHS, FE, and I included past decisions on the strategy to proxy the importance of DIRECT experience.
I also include past decisions on the strategy of neighbors to proxy the importance of INDIRECT experience
So, the basic model I am estimating is as follows :
Y_it = Y_it-1 + Y_jt-1 + Controls + Fixed Effects with i different from j
I would like to run a PLACEBO test to show that INDIRECT experience is really influencing adoption, but it is unclear if I am proceeding in a correct way.
I runned the following regression:
Y_it = Y_it-1 + Y_jt-1 + Controls + Fixed Effects + Y_it+1 + Y_jt+1 with i different from j
If INDIRECT experience at time t-1 matter, I should find that Y_jt+1 is not significant. Correct?
However, I believe the same cannot be done for the DIRECT experience (Y_it+1).
Being an endogenous choice, I found that Y_it+1 is significant.
But this seems reasonable because if I adopt the strategy at time t (because I have done in t-1, so that experience matter), I am also likely to adopt in t+1.
Am I correct in this?
Suggestions/comments would be extremely appreciated.
Many thanks
Fabio
I have a question on how to run a placebo test in STATA.
I have read the following entry from the STATA Forum, but I am unsure the same framework applies to my case.
I am running a model to explain the role of experience on adoption of a strategy.
I have several control variables on the RHS, FE, and I included past decisions on the strategy to proxy the importance of DIRECT experience.
I also include past decisions on the strategy of neighbors to proxy the importance of INDIRECT experience
So, the basic model I am estimating is as follows :
Y_it = Y_it-1 + Y_jt-1 + Controls + Fixed Effects with i different from j
I would like to run a PLACEBO test to show that INDIRECT experience is really influencing adoption, but it is unclear if I am proceeding in a correct way.
I runned the following regression:
Y_it = Y_it-1 + Y_jt-1 + Controls + Fixed Effects + Y_it+1 + Y_jt+1 with i different from j
If INDIRECT experience at time t-1 matter, I should find that Y_jt+1 is not significant. Correct?
However, I believe the same cannot be done for the DIRECT experience (Y_it+1).
Being an endogenous choice, I found that Y_it+1 is significant.
But this seems reasonable because if I adopt the strategy at time t (because I have done in t-1, so that experience matter), I am also likely to adopt in t+1.
Am I correct in this?
Suggestions/comments would be extremely appreciated.
Many thanks
Fabio
