Hello! I am brand-new to stata, so please forgive a possibly badly posed question.
I have a 2SLS regression with two-way fixed effects and clustered standard errors, written as follows:
Drcapout is the change in output. Drcapspend is the change in government spending by state, instrumented by national spending. I add state and year fixed effects, and cluster by state. However, this gives a variance matrix of all zeros, which results in a "warning: variance matrix is nonsymmetric or highly singular" warning.
Oddly, the regression works just fine without clustered standard errors. The following regression also works fine:
Where Drcapout2 is Drcapout deflated by a measure of local prices.
I genuinely have no idea what the problem is, and would appreciate any pointers.
I have a 2SLS regression with two-way fixed effects and clustered standard errors, written as follows:
Code:
xi: ivregress 2sls Drcapout (Drcapspend = i.statenum*Drcapspend_nat) i.year i.statenum, vce(cl statenum)
Oddly, the regression works just fine without clustered standard errors. The following regression also works fine:
Code:
xi: ivregress 2sls Drcaprout2 (Drcapspend = i.statenum*Drcapspend_nat) i.year i.statenum, vce(cl statenum)
I genuinely have no idea what the problem is, and would appreciate any pointers.
