Hi!
In my panel data analysis I am using research and development expenditures (R&D) of firms as an independent variable and I have to calculate inflation adjusted R&D. I'm not sure about whether to use starting year as reference or years on rolling basis. My dataset is unbalanced panel data (1975-2016) and I'm using fixed effect model. If anyone can help me with a code to calculate inflation adjusted R&D expenditure, that would be helpful.
Secondly, do I need to add industry dummies in the model as someone suggested me. As far as I know, in fixed effect model we don't need to add any cross section related factor which is not variable over time and industry of a company remains fixed over time.
Note: Inflation is in percentage
In my panel data analysis I am using research and development expenditures (R&D) of firms as an independent variable and I have to calculate inflation adjusted R&D. I'm not sure about whether to use starting year as reference or years on rolling basis. My dataset is unbalanced panel data (1975-2016) and I'm using fixed effect model. If anyone can help me with a code to calculate inflation adjusted R&D expenditure, that would be helpful.
Secondly, do I need to add industry dummies in the model as someone suggested me. As far as I know, in fixed effect model we don't need to add any cross section related factor which is not variable over time and industry of a company remains fixed over time.
Code:
* Example generated by -dataex-. To install: ssc install dataex clear input int(permno fiscalyear) float(rd inflation) 10006 1975 3.235 9.13193 10006 1976 3.786 5.737027 10006 1977 3.858 6.48646 10006 1978 4.702 7.647464 10006 1979 5.04 11.26604 10006 1980 6.565 13.50937 10006 1981 8.234 10.31553 10006 1982 7.661 6.160616 10006 1983 6.792 3.212435 10007 1989 .505 4.827003 10010 1986 .806 1.858736 10010 1987 .833 3.740876 10010 1988 .823 4.009088 10010 1989 .863 4.827003 10010 1990 .967 5.397956 10010 1991 1.942 4.234964 10010 1992 2.469 3.02882 10010 1993 4.791 2.951657 10010 1994 4.783 2.607442 10012 1987 .349 3.740876 10012 1988 .384 4.009088 10012 1989 .264 4.827003 10012 1990 .206 5.397956 10012 1991 .23 4.234964 10012 1992 .166 3.02882 end
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