Panel IV with `xtivreg2` (Instrumental Variables)

In the previous exercises we estimated the effect of conservation agriculture on maize yields using cross-sectional IV. But the Michler_JEEM.dta dataset is actually a panel: households (rc) are observed over multiple years. This means we can absorb time-invariant household heterogeneity with fixed effects while instrumenting for CA adoption.

For whatever reason, xtivre2 can’t hand factor-variable operators like i.year. So, before running your regressions, use the Stata command qui tab year, gen(y_) to create dummy variables for each year and include these in your regressions.

Using Michler_JEEM.dta (maize only), declare the panel structure with xtset rc.
Run a fixed effects regression using xtreg using the same variables as in the previous exercises but adding feand cluster(rc). Store as fe.
Run a panel IV regression using xtivreg2 using the same variables as in the previous exercises but adding fe and cluster(rc). Store as fe_iv.

1. Adapt your previous table to add 2 more columns. Order results as ols, manual, iv, fe, fe_iv. Export and put into Overleaf.

2. Adapt your previous coefplot to include all 5 specifications and export to Overleaf.

3. How does the CA coefficient change when you move from pooled OLS to fixed effects? What does this tell you about time-invariant confounders?

4. How does the CA coefficient change when you add IV? What does this tell you about time-varying confounders?