How to Add Deterministic Trend to Panel Data?

[Joyce Parreira]

Hello,

I have a panel data with 115 countries and 20 years. I did unit root test in all my independent variables and the dependent. From my results, I have the presence of unit root in some of the independent and the dependent. According to the literature that I'm following, I need to add a deterministic trend to my model.

This is my original regression:

xi:reg reconsumption lngdppppcte2011lag1 manufacturinglag1 lnoilpricelag1 energyimportslag1 leftlag4 i.country, robust

How do I add a deterministic trend to panel data?

I thought that adding

i.year

was enough but I was told that is not the correct way. Now I don't know how to proceed.


Thanks in advance!

[Phil Bromiley]

You'll increase your chances of a useful answer by following the FAQ on asking questions - provide Stata code in code delimiters, readable Stata output, and sample data using dataex.

I don't work with unit root tests. At least some sources equate a deterministic trend to including year (as a variable not as a set of dummies) in the model.