*Before loading data, you must set maxvar and matsize *set maxvar 5000 *set matsize 10000 set more off gen ltc8=ln(tc8) gen ltar1=log(tar1*tar2) gen ltar2=log(cwtar1*cwtar2) gen ldist=log(dist) gen logtrade12=ln(trade12) gen logtrade21=ln(trade21) gen logaverage=(logtrade12+logtrade21)/2 gen logtrade=logtrade12+logtrade21 gen loggdpsum=ln(gdp1+gdp2) gen loggdpprod=ln(gdp1*gdp2) gen s1=gdp1/(gdp1+gdp2) gen s2=gdp2/(gdp1+gdp2) gen logsprod=ln(s1*s2) gen gs=gs1*gs2 replace gs=0 if gs==. gen dpeg=. replace dpeg=1 if ctry1=="USA" & usd2==1 replace dpeg=1 if ctry2=="USA" & usd1==1 replace dpeg=1 if ctry1=="UK" & gbp2==1 replace dpeg=1 if ctry2=="UK" & gbp1==1 replace dpeg=1 if ctry1=="FRA" & frf2==1 replace dpeg=1 if ctry2=="FRA" & frf1==1 replace dpeg=0 if dpeg==. gen fixed=0 replace fixed=1 if gs==1 replace fixed=1 if dpeg==1 quietly tab year, gen(t) egen ctypair=group(ctry1 ctry2) quietly tab ctypair, gen(pair) tsset ctypair year *With country fixed effects quiet tab ctry2, gen(c) replace c3=1 if ctry1=="AUS" replace c4=1 if ctry1=="BEL" replace c6=1 if ctry1=="CAN" replace c7=1 if ctry1=="DEN" replace c8=1 if ctry1=="FRA" replace c11=1 if ctry1=="IND" replace c13=1 if ctry1=="ITA" replace c14=1 if ctry1=="JAP" replace c16=1 if ctry1=="NET" replace c17=1 if ctry1=="NEW" replace c18=1 if ctry1=="NOR" replace c20=1 if ctry1=="POR" replace c21=1 if ctry1=="SPA" replace c23=1 if ctry1=="SWE" replace c25=1 if ctry1=="UK" gen c27=0 replace c27=1 if ctry1=="USA" reg logtrade loggdpprod ldist fixed language empire border c1-c27 if (complete==1 & year<1914 & fixed~=.), robust reg logtrade loggdpprod ldist fixed language empire border c1-c27 if (complete==1 & year>1920 & year<1940 & fixed~=.), robust reg logtrade loggdpprod ldist fixed language empire border c1-c27 if (complete==1 & year>1949 & fixed~=.), robust *With country-year and year fixed effects preserve drop if year>1913 xi: reg logtrade ldist fixed language empire border i.year*c1 i.year*c2 i.year*c3 i.year*c4 i.year*c5 i.year*c6 i.year*c7 i.year*c8 i.year*c9 i.year*c10 i.year*c11 i.year*c12 i.year*c13 i.year*c14 i.year*c15 i.year*c16 i.year*c17 i.year*c18 i.year*c19 i.year*c20 i.year*c21 i.year*c22 i.year*c23 i.year*c24 i.year*c25 i.year*c26 i.year*c27 if (complete==1 & year<1914 & fixed~=.), robust restore preserve drop if (year<1921|year>1939) xi: reg logtrade ldist fixed language empire border i.year*c1 i.year*c2 i.year*c3 i.year*c4 i.year*c5 i.year*c6 i.year*c7 i.year*c8 i.year*c9 i.year*c10 i.year*c11 i.year*c12 i.year*c13 i.year*c14 i.year*c15 i.year*c16 i.year*c17 i.year*c18 i.year*c19 i.year*c20 i.year*c21 i.year*c22 i.year*c23 i.year*c24 i.year*c25 i.year*c26 i.year*c27 if (complete==1 & year>1920 & year<1940 & fixed~=.), robust restore preserve drop if year<1950 xi: reg logtrade ldist fixed language empire border i.year*c1 i.year*c2 i.year*c3 i.year*c4 i.year*c5 i.year*c6 i.year*c7 i.year*c8 i.year*c9 i.year*c10 i.year*c11 i.year*c12 i.year*c13 i.year*c14 i.year*c15 i.year*c16 i.year*c17 i.year*c18 i.year*c19 i.year*c20 i.year*c21 i.year*c22 i.year*c23 i.year*c24 i.year*c25 i.year*c26 i.year*c27 if (complete==1 & year>1949 & fixed~=.), robust restore *Trade cost regressions reg ltc8 ldist fixed language empire border c1-c27 t1-t130 if (complete==1 & fixed~=. & (year<1914|(year>1920 & year<1940)|year>1949)), robust reg ltc8 ldist fixed language empire border c1-c27 t1-t130 if (complete==1 & year<1914 & fixed~=.), robust reg ltc8 ldist fixed language empire border c1-c27 t1-t130 if (complete==1 & year>1920 & year<1940 & fixed~=.), robust reg ltc8 ldist fixed language empire border c1-c27 t1-t130 if (complete==1 & year>1949 & fixed~=.), robust *Residuals versus trade costs xi: reg logtrade i.year*c1 i.year*c2 i.year*c3 i.year*c4 i.year*c5 i.year*c6 i.year*c7 i.year*c8 i.year*c9 i.year*c10 i.year*c11 i.year*c12 i.year*c13 i.year*c14 i.year*c15 i.year*c16 i.year*c17 i.year*c18 i.year*c19 i.year*c20 i.year*c21 i.year*c22 i.year*c23 i.year*c24 i.year*c25 i.year*c26 i.year*c27 if (complete==1 & year<1914 & fixed~=.) predict e1 if (complete==1 & year<1914 & fixed~=.), residuals xi: reg logtrade i.year*c1 i.year*c2 i.year*c3 i.year*c4 i.year*c5 i.year*c6 i.year*c7 i.year*c8 i.year*c9 i.year*c10 i.year*c11 i.year*c12 i.year*c13 i.year*c14 i.year*c15 i.year*c16 i.year*c17 i.year*c18 i.year*c19 i.year*c20 i.year*c21 i.year*c22 i.year*c23 i.year*c24 i.year*c25 i.year*c26 i.year*c27 if (complete==1 & year>1920 & year<1940 & fixed~=.) predict e2 if (complete==1 & year>1920 & year<1940 & fixed~=.), residuals xi: reg logtrade i.year*c1 i.year*c2 i.year*c3 i.year*c4 i.year*c5 i.year*c6 i.year*c7 i.year*c8 i.year*c9 i.year*c10 i.year*c11 i.year*c12 i.year*c13 i.year*c14 i.year*c15 i.year*c16 i.year*c17 i.year*c18 i.year*c19 i.year*c20 i.year*c21 i.year*c22 i.year*c23 i.year*c24 i.year*c25 i.year*c26 i.year*c27 if (complete==1 & year>1949 & fixed~=.) predict e3 if (complete==1 & year>1949 & fixed~=.), residuals