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  • threshold variable in the xthreg command

    i am using xthreg command to fit a threshold model. my dependent variable 'y' is poverty rate. and my independent variable 'x' is trade openness. my question is in the xthreg command can the threshold variable be the same as the dependent variable?

    more specifically can the threshold variable q be the same as y.
    yit = μ + Xit (qit < γ)β1 + Xit (qit ≥ γ)β2 + ui + eit

    from what i have read there should not be an issue but i am not 100% sure. any help would be appreciated. thank you

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