Hi all,

I am currently running panel analysis to learn the effect of governmental incentives on battery electric vehicle (BEV) market share. The data are collected for the timeline from 2013q1 to 2018q2 (T=22) in 5 countries (N=5). Beside Grant Incentive (measured in Thousand euro) and Tax Incentive (total of tax incentives available), I also take Gasoline price and GDP percapita as the independable variable explaining the depenable variable BEV market share.

I plan to run FE model to analyse how the change in incentive policies might have impact on sale of the vehicle. Everything was fine with the first run of FE within-groups regression, but the problem arised as I tried to incorporate the time fixed effect with time dummies into the model. The coefficients for every single time dummy variable are significant and all of my main explanatory variables were found to be insignificant in the second model. I am not sure what the reasons behind this outcomes, but it is quite bizarre when there is an fixed effect for every single period of time. I would love to hear advice or comment from you guy on this, I really don't know what to do next and how i am going to interpret this in my paper.

Below are results extracted from Stata for more insight into my issue.

I am currently running panel analysis to learn the effect of governmental incentives on battery electric vehicle (BEV) market share. The data are collected for the timeline from 2013q1 to 2018q2 (T=22) in 5 countries (N=5). Beside Grant Incentive (measured in Thousand euro) and Tax Incentive (total of tax incentives available), I also take Gasoline price and GDP percapita as the independable variable explaining the depenable variable BEV market share.

I plan to run FE model to analyse how the change in incentive policies might have impact on sale of the vehicle. Everything was fine with the first run of FE within-groups regression, but the problem arised as I tried to incorporate the time fixed effect with time dummies into the model. The coefficients for every single time dummy variable are significant and all of my main explanatory variables were found to be insignificant in the second model. I am not sure what the reasons behind this outcomes, but it is quite bizarre when there is an fixed effect for every single period of time. I would love to hear advice or comment from you guy on this, I really don't know what to do next and how i am going to interpret this in my paper.

Below are results extracted from Stata for more insight into my issue.

Code:

xtreg lnBEVshare Grant TaxIncentives lnGasoline lnGDPcapita, fe Fixed-effects (within) regression Number of obs = 110 Group variable: country Number of groups = 5 R-sq: Obs per group: within = 0.6224 min = 22 between = 0.5842 avg = 22.0 overall = 0.4819 max = 22 F(4,101) = 41.62 corr(u_i, Xb) = -0.7650 Prob > F = 0.0000 ------------------------------------------------------------------------------- lnBEVshare | Coef. Std. Err. t P>|t| [95% Conf. Interval] --------------+---------------------------------------------------------------- Grant | .1043704 .0391062 2.67 0.009 .0267942 .1819467 TaxIncentives | .1110161 .0892676 1.24 0.217 -.0660669 .288099 lnGasoline | -3.2776 .7100777 -4.62 0.000 -4.686203 -1.868996 lnGDPcapita | 9.647115 1.5195 6.35 0.000 6.632837 12.66139 _cons | -95.97945 14.45418 -6.64 0.000 -124.6526 -67.30625 --------------+---------------------------------------------------------------- sigma_u | .70211881 sigma_e | .44357915 rho | .71472674 (fraction of variance due to u_i) ------------------------------------------------------------------------------- F test that all u_i=0: F(4, 101) = 10.48 Prob > F = 0.0000

Code:

xtreg lnBEVshare Grant TaxIncentives lnGasoline lnGDPcapita i.quarterly_date, fe i.quarterly_d~e _Iquarterly_212-233 (naturally coded; _Iquarterly_212 omitted) Fixed-effects (within) regression Number of obs = 110 Group variable: country Number of groups = 5 R-sq: Obs per group: within = 0.8110 min = 22 between = 0.9691 avg = 22.0 overall = 0.7331 max = 22 F(25,80) = 13.73 corr(u_i, Xb) = 0.2024 Prob > F = 0.0000 --------------------------------------------------------------------------------- lnBEVshare | Coef. Std. Err. t P>|t| [95% Conf. Interval] ----------------+---------------------------------------------------------------- Grant | .0645445 .0341455 1.89 0.062 -.0034071 .1324961 TaxIncentives | .0898662 .0783161 1.15 0.255 -.0659877 .2457202 lnGasoline | .3255609 1.451366 0.22 0.823 -2.562749 3.21387 lnGDPcapita | 1.970089 2.209071 0.89 0.375 -2.426103 6.36628 _Iquarterly_213 | .6787434 .2236741 3.03 0.003 .2336177 1.123869 _Iquarterly_214 | .8481949 .2238284 3.79 0.000 .4027621 1.293628 _Iquarterly_215 | 1.35318 .2304915 5.87 0.000 .8944873 1.811873 _Iquarterly_216 | 1.000312 .2284411 4.38 0.000 .5456997 1.454924 _Iquarterly_217 | 1.277252 .2252816 5.67 0.000 .8289274 1.725577 _Iquarterly_218 | 1.417065 .2262529 6.26 0.000 .9668073 1.867323 _Iquarterly_219 | 1.699331 .2525966 6.73 0.000 1.196647 2.202014 _Iquarterly_220 | 1.531474 .2989914 5.12 0.000 .9364619 2.126486 _Iquarterly_221 | 1.498819 .2481277 6.04 0.000 1.005029 1.992609 _Iquarterly_222 | 1.553567 .2608006 5.96 0.000 1.034557 2.072577 _Iquarterly_223 | 1.814961 .3266448 5.56 0.000 1.164918 2.465005 _Iquarterly_224 | 1.900667 .3823498 4.97 0.000 1.139767 2.661568 _Iquarterly_225 | 1.649063 .3356678 4.91 0.000 .9810626 2.317063 _Iquarterly_226 | 1.798862 .3566489 5.04 0.000 1.089108 2.508616 _Iquarterly_227 | 1.883902 .3349619 5.62 0.000 1.217307 2.550498 _Iquarterly_228 | 2.021837 .3110803 6.50 0.000 1.402768 2.640907 _Iquarterly_229 | 1.943993 .3315663 5.86 0.000 1.284155 2.603831 _Iquarterly_230 | 2.114018 .3556878 5.94 0.000 1.406176 2.821859 _Iquarterly_231 | 2.211986 .3442955 6.42 0.000 1.526816 2.897156 _Iquarterly_232 | 2.247237 .3337425 6.73 0.000 1.583069 2.911406 _Iquarterly_233 | 2.100275 .3625178 5.79 0.000 1.378841 2.821708 _cons | -25.94151 20.9779 -1.24 0.220 -67.68886 15.80584 ----------------+---------------------------------------------------------------- sigma_u | .33657871 sigma_e | .35264502 rho | .47670193 (fraction of variance due to u_i) --------------------------------------------------------------------------------- F test that all u_i=0: F(4, 80) = 4.54 Prob > F = 0.0023

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