Diff-inDiff Are exports from i to j, the same as imports in i from j? Should they be?. gen test=xij-mji (14 missing values generated). sum test,

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Diff-inDiff 2

1. Are exports from i to j, the same as imports in i from j? Should they be?. gen test=xij-mji (14 missing values generated). sum test, detail test Percentiles Smallest 1% % % Obs % Sum of Wgt % -4.5 Mean Largest Std. Dev % % Variance % Skewness % Kurtosis

2. If you estimate the gravity equation, what part of the variation in bilateral trade is explained by this simple regression?. reg ltrade lrgdp1 lrgdp2 ldist1, cluster(pairid) Linear regression Number of obs = F( 3, 230) = Prob > F = R-squared = Root MSE = (Std. Err. adjusted for 231 clusters in pairid) | Robust ltrade | Coef. Std. Err. t P>|t| [95% Conf. Interval] lrgdp1 | lrgdp2 | ldist1 | _cons | end of do-file

Difference in Difference Estimate of the effect of the Euro on Trade: Basic Specification Who are our treatment group? Who are our control group? When is the Treatment Period and When is the Post Period? Why are we leaving in the controls? (two reasons) What is the identification assumption? What is our parameter of interest?

DiD Estimate. reg ltrade euro after euro_after lrgdp1 lrgdp2 ldist1, cluster(pairid) Linear regression Number of obs = F( 6, 230) = Prob > F = R-squared = Root MSE = (Std. Err. adjusted for 231 clusters in pairid) | Robust ltrade | Coef. Std. Err. t P>|t| [95% Conf. Interval] euro | after | euro_after | lrgdp1 | lrgdp2 | ldist1 | _cons | end of do-file

What does our DiD estimator look like graphically?

How do the results change when we add controls? How about when we also add time FE? Why do we drop the after dummy? How about when we also include pair FE? Why do we now exclude the Euro Dummy? Language, and border dummies etc? What do we learn from this? Does this help with the identification assumption? (1)(2)(3) VARIABLESNo FETime FETime & Pair FE euro (0.0763)(0.0765) after-0.144*** (0.0326) euro_after0.358***0.309***0.280*** (0.0563)(0.0531)(0.0508) lrgdp10.791***0.835***0.805*** (0.0268)(0.0289)(0.0871) lrgdp20.821***0.855***0.879*** (0.0239)(0.0252)(0.0736) ldist ***-0.860*** (0.0569)(0.0559) language0.744***0.733*** (0.125)(0.124) border (0.117) island0.268**0.354*** (0.118)(0.111) landl-0.456***-0.417*** (0.0864)(0.0860) eu **0.254***0.344*** (0.0671)(0.0698)(0.0496) canus0.835***0.976***0.492*** (0.135)(0.131)(0.0408) cer1.398***1.430***0.390*** (0.233)(0.220)(0.0371) efta0.667***0.692***0.253*** (0.0872)(0.0824)(0.0607) Observations10,138 R-squared

Estimating Year-by-Year interactions?

What do we see?