Yit = real import from country i to j in year t SGDPit = the sum of real GDP of country i and j in year t RFACit = relative factor price between country i and j in year t SIMit = degree of similarity (in terms of GDP) between county i and j in year t REERit = Real Effective Exchange Rate between country i and j in year t Distancei = distance from country i capital city to country j capital city (km). Areai = area country i (km2) FTA1it, FTA21it, FTA22it = Free Trade Agreements (FTA) dummy variables αi = country effect, it captures country i's characteristics that affect trade between country i and j other than accounted for by other regressors. λt = time effect, it captures other factors that affect country j trade with any country in period t. µit = error term
The estimation is Feasible Generalized Least Square using fixed effects for country variable and random effects for time variable. Please, could anyone explain to me how to do this on STATA? I was confused since it is use a mix of fixed and random effects.