Panel Data & Pearson's Correlation Matrix

[Jenifar Soheli]

Hi,

I am using log variable. Should I use the logged variable for my Pearson's matrix or regular variable? I have used both and saw the result varies. Which one is correct?

Thank you
Jenifar
(Stata 16.1 SE)

[Carlo Lazzaro]

Jenifar:
I'm not clear with what you're asking here.
Temptative reply: if you mean the variance and covariance matrix displaying correlation, please see the following toy-example:

. use "https://www.stata-press.com/data/r16/nlswork.dta"
. xtreg ln_wage c.age##c.age, vce(cluster idcode)

Random-effects GLS regression                   Number of obs     =     28,510
Group variable: idcode                          Number of groups  =      4,710

R-sq:                                           Obs per group:
     within  = 0.1087                                         min =          1
     between = 0.1015                                         avg =        6.1
     overall = 0.0870                                         max =         15

                                                Wald chi2(2)      =    1258.33
corr(u_i, X)   = 0 (assumed)                    Prob > chi2       =     0.0000

                             (Std. Err. adjusted for 4,710 clusters in idcode)
------------------------------------------------------------------------------
             |               Robust
     ln_wage |      Coef.   Std. Err.      z    P>|z|     [95% Conf. Interval]
-------------+----------------------------------------------------------------
         age |   .0590339   .0041049    14.38   0.000     .0509884    .0670795
             |
 c.age#c.age |  -.0006758   .0000688    -9.83   0.000    -.0008107    -.000541
             |
       _cons |   .5479714   .0587198     9.33   0.000     .4328826    .6630601
-------------+----------------------------------------------------------------
     sigma_u |   .3654049
     sigma_e |  .30245467
         rho |  .59342665   (fraction of variance due to u_i)
------------------------------------------------------------------------------

. estat vce, corr

Correlation matrix of coefficients of xtreg model

             |              c.age#         
        e(V) |      age     c.age     _cons
-------------+------------------------------
         age |   1.0000                    
 c.age#c.age |  -0.9907    1.0000          
       _cons |  -0.9890    0.9641    1.0000

.