area specific linear time trend

[Katie Zhang]

I have 2012-2018(Aug) monthly data, there are 80 (6*12+8) time periods. 52 areas in the data set

I have Year and Month in the data. How do I control area specific trend?

coding of the time variables:
year_month: 1-80
year:2012-2018
year sequence: 1-7
month_sequence:1-12


is the below code correct for controlling area specific time trend?

xtset area_id year_month

xtreg Y X c.year_sequence*i.area_id c.month_sequence*i.area_id To approve a single suggestion, mouse over it and click "✔"
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[Carlo Lazzaro]

Katie:
you should consider -fvvarlist- notation for creating interactions, too (instead that doing them by hand).
As far as your code is concerned, you may want to try something along the following lines:

xtreg Y X c.year_sequence##i.area_id c.month_sequence##i.area_id

Admittedly, I'm not clear why including both year and month sequences in the right-hand side of your regression equation, but you'll surely have good reasons to follow this approach.

[Katie Zhang]

I have 2012-2018(Aug) monthly data, there are 80 (6*12+8) time periods. 52 areas in the data set

I have Year and Month in the data. How do I control area specific trend?

coding of the time variables:
year_month: 1-80
year:2012-2018
year sequence: 1-7
month_sequence:1-12


is the below code correct for controlling area specific time trend?

xtset area_id year_month

xtreg Y X c.year_sequence*i.area_id c.month_sequence*i.area_id To approve a single suggestion, mouse over it and click "✔"
Click the bubble to approve all of its suggestions.

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Hi Carlo, thanks for your reply.


1. I am not sure whether including both year and month are correct. My goal is to control for specific area trend. what do you think is a correct way?

I expect there is yearly trend and also within year, there is maybe variation.




2. another question is in you code, you use ##

is that necessary to use ##? because the area fixed effect is automatically included (xtset areaid year_month).


I mean whether we should use # instead of ##?

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