Hi Everyone!
I am running a regression with firm fixed effects using the xtreg, fe command. As my underlying theory suggests a quadratic relationship (inverted u-shape) between my variables, I am including a quadratic term. My command looks like this:
xtreg dv iv iv_2 cv, fe vce (cluster id)
where dv is the dependent variable, iv the independent variable and iv_2 the square of my independent variable. Of course, I also included a set of control variables (cv).
The coefficient of iv is positiv and significant while the coefficient of iv_2 is negativ and significant. Thus, my results indicate an inverted u-shaped relationship. However, I am not sure how to interprete my results, especially a possible turning point and further analysis with the utest command following Lind/Melhum (2010).
1) How do I interprete a turning point when using a regression with firm fixed effects?
2) Is it possible to apply the utest command by Lind/Melhum (2010) after a regression with firm fixed effects?
I am running a regression with firm fixed effects using the xtreg, fe command. As my underlying theory suggests a quadratic relationship (inverted u-shape) between my variables, I am including a quadratic term. My command looks like this:
xtreg dv iv iv_2 cv, fe vce (cluster id)
where dv is the dependent variable, iv the independent variable and iv_2 the square of my independent variable. Of course, I also included a set of control variables (cv).
The coefficient of iv is positiv and significant while the coefficient of iv_2 is negativ and significant. Thus, my results indicate an inverted u-shaped relationship. However, I am not sure how to interprete my results, especially a possible turning point and further analysis with the utest command following Lind/Melhum (2010).
1) How do I interprete a turning point when using a regression with firm fixed effects?
2) Is it possible to apply the utest command by Lind/Melhum (2010) after a regression with firm fixed effects?