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Thread: Country-level Clustering

  1. #1
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    Country-level Clustering




    Hi All,

    I have a database on firms that went bankrupt/not bankrupt from 1999-2011 across 30+ countries. I have included year fixed effects in my logistic regressions. Would you also include country-level clustering in the regression models? What are the cons and pros of including country-level clustering?

    Thanks + for your help on this.

  2. #2
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    Re: Country-level Clustering


    Hi,
    I think including countries is a very good idea. The data points you have arr definitely not independent, you would expect a strong correlation within a country and this, unless accounted for, can completely invalidate your model.

    regatds
    Last edited by rogojel; 10-29-2015 at 02:36 AM. Reason: typos

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