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  • Multicollinearity in simple diference-in-differences model

    Hi All,
    I have a simple 2-period panel data and I am trying to run a difference-in-differences model using the xtreg command.

    generate treatxpost = treatment*post
    xtreg sales post treatment treatxpost, fe

    treatment and post are the dummy variables treatment group and post period.

    I have balanced data for households and each household has sales in the pre and post period.

    I am not getting an estimate for treatment as Stata is telling me: treatment omitted because of collinearity.

    How do I get an estimate for both the treatment and post along with the interaction term treatxpost?

    Appreciate your pointers on this.

    Thanks,
    Laxman.

  • Laxman Sivaraman
    replied
    Okay, I will do that. Thank you!

    Leave a comment:


  • Joseph Coveney
    replied
    Search the list for Clyde Schechter's previous replies to this same question. It's been raised numerous times and he's always polite and patient—you'll benefit from his answers.

    Leave a comment:

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