non-negative outcome variable, non-negative endogenous variable, and fixed effects

[haiyan lin]

Dear All,

I am working with bilateral trade data, the outcome variable is nonnegative. The main explanatory variable is non-negative as well, with endogeneity. I need to control for three levels of fixed effects: importer-exporter, importer-year, and exporter-year. I have searched around and could not find an ideal estimation method. Could anyone provide some advice? Much appreciated!

Regards,
Haiyan

[haiyan lin]

Would the estimation be correct by estimating the first stage with PPMLFE and then inserting the residuals in the second stage with PPMLFE? That is, use the control function method with PPMLFE in the two stages.

Many thanks for any advice!
Haiyan