Hi all,
I am currently running panel analysis to learn the effect of governmental incentives on battery electric vehicle (BEV) market share. The data are collected for the timeline from 2013q1 to 2018q2 (T=22) in 5 countries (N=5). Beside Grant Incentive (measured in Thousand euro) and Tax Incentive (total of tax incentives available), I also take Gasoline price and GDP percapita as the independable variable explaining the depenable variable BEV market share.
I plan to run FE model to analyse how the change in incentive policies might have impact on sale of the vehicle. Everything was fine with the first run of FE within-groups regression, but the problem arised as I tried to incorporate the time fixed effect with time dummies into the model. The coefficients for every single time dummy variable are significant and all of my main explanatory variables were found to be insignificant in the second model. I am not sure what the reasons behind this outcomes, but it is quite bizarre when there is an fixed effect for every single period of time. I would love to hear advice or comment from you guy on this, I really don't know what to do next and how i am going to interpret this in my paper.
Below are results extracted from Stata for more insight into my issue.
I am currently running panel analysis to learn the effect of governmental incentives on battery electric vehicle (BEV) market share. The data are collected for the timeline from 2013q1 to 2018q2 (T=22) in 5 countries (N=5). Beside Grant Incentive (measured in Thousand euro) and Tax Incentive (total of tax incentives available), I also take Gasoline price and GDP percapita as the independable variable explaining the depenable variable BEV market share.
I plan to run FE model to analyse how the change in incentive policies might have impact on sale of the vehicle. Everything was fine with the first run of FE within-groups regression, but the problem arised as I tried to incorporate the time fixed effect with time dummies into the model. The coefficients for every single time dummy variable are significant and all of my main explanatory variables were found to be insignificant in the second model. I am not sure what the reasons behind this outcomes, but it is quite bizarre when there is an fixed effect for every single period of time. I would love to hear advice or comment from you guy on this, I really don't know what to do next and how i am going to interpret this in my paper.
Below are results extracted from Stata for more insight into my issue.
Code:
xtreg lnBEVshare Grant TaxIncentives lnGasoline lnGDPcapita, fe
Fixed-effects (within) regression Number of obs = 110
Group variable: country Number of groups = 5
R-sq: Obs per group:
within = 0.6224 min = 22
between = 0.5842 avg = 22.0
overall = 0.4819 max = 22
F(4,101) = 41.62
corr(u_i, Xb) = -0.7650 Prob > F = 0.0000
-------------------------------------------------------------------------------
lnBEVshare | Coef. Std. Err. t P>|t| [95% Conf. Interval]
--------------+----------------------------------------------------------------
Grant | .1043704 .0391062 2.67 0.009 .0267942 .1819467
TaxIncentives | .1110161 .0892676 1.24 0.217 -.0660669 .288099
lnGasoline | -3.2776 .7100777 -4.62 0.000 -4.686203 -1.868996
lnGDPcapita | 9.647115 1.5195 6.35 0.000 6.632837 12.66139
_cons | -95.97945 14.45418 -6.64 0.000 -124.6526 -67.30625
--------------+----------------------------------------------------------------
sigma_u | .70211881
sigma_e | .44357915
rho | .71472674 (fraction of variance due to u_i)
-------------------------------------------------------------------------------
F test that all u_i=0: F(4, 101) = 10.48 Prob > F = 0.0000
Code:
xtreg lnBEVshare Grant TaxIncentives lnGasoline lnGDPcapita i.quarterly_date, fe
i.quarterly_d~e _Iquarterly_212-233 (naturally coded; _Iquarterly_212 omitted)
Fixed-effects (within) regression Number of obs = 110
Group variable: country Number of groups = 5
R-sq: Obs per group:
within = 0.8110 min = 22
between = 0.9691 avg = 22.0
overall = 0.7331 max = 22
F(25,80) = 13.73
corr(u_i, Xb) = 0.2024 Prob > F = 0.0000
---------------------------------------------------------------------------------
lnBEVshare | Coef. Std. Err. t P>|t| [95% Conf. Interval]
----------------+----------------------------------------------------------------
Grant | .0645445 .0341455 1.89 0.062 -.0034071 .1324961
TaxIncentives | .0898662 .0783161 1.15 0.255 -.0659877 .2457202
lnGasoline | .3255609 1.451366 0.22 0.823 -2.562749 3.21387
lnGDPcapita | 1.970089 2.209071 0.89 0.375 -2.426103 6.36628
_Iquarterly_213 | .6787434 .2236741 3.03 0.003 .2336177 1.123869
_Iquarterly_214 | .8481949 .2238284 3.79 0.000 .4027621 1.293628
_Iquarterly_215 | 1.35318 .2304915 5.87 0.000 .8944873 1.811873
_Iquarterly_216 | 1.000312 .2284411 4.38 0.000 .5456997 1.454924
_Iquarterly_217 | 1.277252 .2252816 5.67 0.000 .8289274 1.725577
_Iquarterly_218 | 1.417065 .2262529 6.26 0.000 .9668073 1.867323
_Iquarterly_219 | 1.699331 .2525966 6.73 0.000 1.196647 2.202014
_Iquarterly_220 | 1.531474 .2989914 5.12 0.000 .9364619 2.126486
_Iquarterly_221 | 1.498819 .2481277 6.04 0.000 1.005029 1.992609
_Iquarterly_222 | 1.553567 .2608006 5.96 0.000 1.034557 2.072577
_Iquarterly_223 | 1.814961 .3266448 5.56 0.000 1.164918 2.465005
_Iquarterly_224 | 1.900667 .3823498 4.97 0.000 1.139767 2.661568
_Iquarterly_225 | 1.649063 .3356678 4.91 0.000 .9810626 2.317063
_Iquarterly_226 | 1.798862 .3566489 5.04 0.000 1.089108 2.508616
_Iquarterly_227 | 1.883902 .3349619 5.62 0.000 1.217307 2.550498
_Iquarterly_228 | 2.021837 .3110803 6.50 0.000 1.402768 2.640907
_Iquarterly_229 | 1.943993 .3315663 5.86 0.000 1.284155 2.603831
_Iquarterly_230 | 2.114018 .3556878 5.94 0.000 1.406176 2.821859
_Iquarterly_231 | 2.211986 .3442955 6.42 0.000 1.526816 2.897156
_Iquarterly_232 | 2.247237 .3337425 6.73 0.000 1.583069 2.911406
_Iquarterly_233 | 2.100275 .3625178 5.79 0.000 1.378841 2.821708
_cons | -25.94151 20.9779 -1.24 0.220 -67.68886 15.80584
----------------+----------------------------------------------------------------
sigma_u | .33657871
sigma_e | .35264502
rho | .47670193 (fraction of variance due to u_i)
---------------------------------------------------------------------------------
F test that all u_i=0: F(4, 80) = 4.54 Prob > F = 0.0023