Collinearity in FE models

[Mutlu CELIKKOL]

Dear All;
My research is based on the influence of cultural dimesions (6 in total) on the innovation success of countries. I have collected the innovation success rates for five years. It cover more than 50 countries.Independent variables are cultural dimesions and they are fixed. So when I run longitudal regression wth FE model, DV'a are omitted because collinearity, but no problem with RE models. The results from RE model are all in line with SPSS. I have read that we can you RE models if we have chosen our sample on a random basis.My questions are 1) Is there a " trick " in statao avoid
collinearty (like normaliation of the values in SPPS or what can I do else ? 2) What is your opinion about using RE model in my senario

Thanks in advance,,
Mutlu

[Carlo Lazzaro]

Mutlu:
- as per FAQ, please post what you typed and what Stata gave you back. Thanks;
- -fe- machinery wipes out time-invariant predictors. Hence, there's nothing you (or Stata) can do to avoid it;
- -hausman- can give you some indications about preferring -fe- vs -re- specification.

[Mutlu CELIKKOL]

Carlo, thank you so much for the prompt reply, below is my commands;

xtset ID YRS, yearly
panel variable: ID (strongly balanced)
time variable: YRS, 2013 to 2017
delta: 1 year

.
. xtreg GEI PD IND MAS, fe

Stata replied as follows

note: PD omitted because of collinearity
note: IND omitted because of collinearity
note: MAS omitted because of collinearity

I can run Hausman test , becuse it repuires a fe regression and re regression results for storing.

What prevents me using RE Regression fory model, because I ran it several times all results are in line
with SPSS, performed on a year by year basis ?
Thank you so much indeed




Fixed-effects (within) regression Number of obs = 405
Group variable: ID Number of groups = 81

R-sq: within = 0.0000 Obs per group: min = 5
between = . avg = 5.0
overall = . max = 5

F(0,324) = 0.00
corr(u_i, Xb) = . Prob > F = .

[Carlo Lazzaro]

Mutlu:
there's something peculiar with your regression specification.
Can you please post and excerpt/example of your data?