use cb_rh_iodata.dta, clear xtset sum inflation lvaw dm2_new l.lngdp l.dgdp_k l.openness polity2 FH xconst logchecks_lax polconiii press xrdum l.fiscal_balance pres_only /// leg_only pres_leg l.wdgdpdefl if sample & (inflation<150 | dm2_new<150) ** UNIT ROOT TESTS multipurt lninfl if sample, lags(1) multipurt logdm2 if sample, lags(1) multipurt lvaw if sample, lags(1) *** HAUSMAN TESTS xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe est store fe xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , re est store re hausman fe re xtreg lninfl l.lninfl lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /* ib4.decade*/ if sample , fe est store fe xtreg lninfl l.lninfl lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /* ib4.decade*/ if sample , re est store re hausman fe re *** TABLE 1 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) est store tab1_1 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) est store tab1_2 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polconiii_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) est store tab1_3 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.press_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) est store tab1_4 xtreg lninfl l.lninfl lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /* ib4.decade*/ if sample , fe cl(cowcode) est store tab1_5 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /*ib4.decade*/ if sample , fe cl(cowcode) est store tab1_6 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polconiii_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) est store tab1_7 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.press_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) est store tab1_8 #delim ; estout tab1_1 tab1_2 tab1_3 tab1_4 tab1_5 tab1_6 tab1_7 tab1_8 using "table1.txt" , starlevels(* .1 ** .05 *** .01) cells(b(star fmt(%9.3f)) se(par fmt(%9.3f))) stats(N N_g r2, fmt( %9.0f %9.0f %9.3f) labels(N Countries R2 )) replace /*keep(lvaw)*/ drop(*.region *.decade) order(lvaw polity2_cen c.lvaw#c.polity2_cen polconiii_cen c.lvaw#c.polconiii_cen press_cen c.lvaw#c.press_cen L.lninfl L.logdm2 L.lngdp L.dgdp_k L.openness xrdum L.fiscal_balance pres_only leg_only pres_leg ) varlabel(L.lninfl "Lag log inflation" L.dm2_new "Lag change in M2" L.lngdp "Lag log GDP" L.dgdp_k "Lagged GDP growth" L.openness "Lag openness" lvaw "CBI" L.fiscal_balance "Fiscal balance") label; #delim cr *** FIGURES ** MARGINAL EFFECTS: GRAPHS 2-6 capture program drop int2way qui do int2way.do graph drop _all *** FIGURE 2 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) int2way , x(lvaw) z(polity2_trans) zval(0/20) zlabel("Polity IV Score") xlabel(CBI) dvlabel("Change in M2") notitle name(tab3_1, replace) level(90) xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.FH_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region ib4.decade /// if sample , fe cl(cowcode) int2way , x(lvaw) z(FH_trans) zval(1/7) xaxis zlabel("Freedom House Democracy Score") xlabel(CBI) dvlabel("Change in M2") notitle name(tab3_21, replace) level(90) graph combine tab3_1 tab3_21 , title("Marginal Effect of CBI on Change in M2") cols(1) saving(paper\IO_RR_march_2013/final/figure2.gph, replace) play(pol2.grec) /// note("90% confidence interval") graph export figure2.eps , replace *** FIGURE 3 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.xconst xrdum l.fiscal_balance pres_only leg_only pres_leg i.region ib4.decade /// if sample , fe cl(cowcode) int2way , x(lvaw) z(xconst) zval(1/7) name(tab3_2) notitle zlabel("Polity IV Executive Constraints") xaxis level(90) xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.logchecks_lax xrdum l.fiscal_balance pres_only leg_only pres_leg i.region ib4.decade /// if sample , fe cl(cowcode) int2way , x(lvaw) z(logchecks_lax) zval(0(.5)2.5) name(tab3_3) notitle zlabel("Log of checks") xaxis level(90) xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polconiii xrdum l.fiscal_balance pres_only leg_only pres_leg i.region ib4.decade /// if sample , fe cl(cowcode) int2way , x(lvaw) z(polconiii) zval(0(.1).7) name(tab3_4) notitle zlabel("Political constraints iii") xaxis level(90) xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.press xrdum l.fiscal_balance pres_only leg_only pres_leg i.region ib4.decade /// if sample, fe cl(cowcode) int2way , x(lvaw) z(press) zval(0/2) name(tab3_5) notitle zlabel("Freedom of the Press") xaxis level(90) graph combine tab3_2 tab3_3 tab3_4 tab3_5 , title("Marginal Effect of CBI on Change in M2") saving(paper\IO_RR_march_2013/final/graph3.gph, replace) /// note("90% confidence interval") play(comp2.grec) graph export figure3.eps , replace *** FIGURE 4 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) int2way , x(lvaw) z(polity2_trans) zval(0/20) zlabel("Polity IV Score") xlabel(CBI) dvlabel(Inflation) notitle name(tab2_1, replace) level(90) xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.FH_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) int2way , x(lvaw) z(FH_trans) zval(1/7) xaxis zlabel("Freedom House Democracy Score") xlabel(CBI) dvlabel(Inflation) notitle name(tab2_21, replace) level(90) graph combine tab2_1 tab2_21 , title("Marginal Effect of CBI on Inflation") cols(1) saving(paper\IO_RR_march_2013/final/figure4.gph, replace) play(pol1.grec) /// note("90% confidence interval") graph export figure4.eps , replace *** FIGURE 5 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.xconst xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) int2way , x(lvaw) z(xconst) zval(1/7) name(tab2_2) notitle zlabel("Polity IV Executive Constraints") xaxis level(90) xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.logchecks_lax xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) int2way , x(lvaw) z(logchecks_lax) zval(0(.5)2.5) name(tab2_3) notitle zlabel("Log of checks") xaxis level(90) xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polconiii xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) int2way , x(lvaw) z(polconiii) zval(0(.1).7) name(tab2_4) notitle zlabel("Political constraints iii") xaxis level(90) xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.press xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) int2way , x(lvaw) z(press) zval(0/2) name(tab2_5) notitle zlabel("Freedom of the Press") xaxis level(90) graph combine tab2_2 tab2_3 tab2_4 tab2_5 , title("Marginal Effect of CBI on Inflation") saving(paper\IO_RR_march_2013/final/graph5.gph, replace) /// note("90% confidence interval") play(comp1.grec) graph export figure5.eps , replace *** FIGURE 6 xtpcse lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , pairwise int2way , x(lvaw) z(polity2_trans) zval(0(5)20) zlabel(Polity) notitle xaxis xlabel(CBI) name(fig6_1, replace) level(90) xtreg inflation l.inflation l.dm2_new l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample & inflation<150 , fe cl(cowcode) int2way , x(lvaw) z(polity2_trans) zval(0(5)20) zlabel(Polity) notitle xaxis xlabel(CBI) name(fig6_2, replace) level(90) xtpcse logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , pairwise int2way , x(lvaw) z(polity2_trans) zval(0(5)20) zlabel(Polity) notitle xaxis xlabel(CBI) name(fig6_3, replace) level(90) xtreg dm2_new l.dm2_new l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region ib4.decade /// if sample & dm2_new<150 , fe cl(cowcode) int2way , x(lvaw) z(polity2_trans) zval(0(5)20) zlabel(Polity) notitle xaxis xlabel(CBI) name(fig6_4, replace) level(90) graph combine fig6_1 fig6_2 , title("Inflation") name(fig61, replace) graph combine fig6_3 fig6_4 , title("Change in M2") name(fig62, replace) graph combine fig62 fig61 , title("Marginal Effect of CBI") saving("paper\IO_RR_march_2013/fig6_v2.gph", replace) /// note("90% confidence interval" "Column 1 uses pcse; column 2 country fixed effects and non-logged DV") cols(1) play(fig6.grec) graph exportfigure6.eps , replace ** TABLE APPENDIX 2 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.FH_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) est store tab1_21 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.xconst_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) est store tab1_3 xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.logchecks_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , fe cl(cowcode) est store tab1_4 ** TABLE APPENDIX 3 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.FH_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /*ib4.decade*/ if sample , fe cl(cowcode) est store tab2_21 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.xconst_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) est store tab2_3 xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.logchecks_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , fe cl(cowcode) est store tab2_4 ** TABLE APPENDIX 4 - endogeneity of CBI forval i = 1/3 { qui xtreg lninfl l.lninfl l`i'.lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /* ib4.decade*/ if sample , fe cl(cowcode) di "Coefficient for `i' lags CBI is " round(_b[L`i'.lvaw],.001) " with SE of " round(_se[L`i'.lvaw],.001) " & t-stat of " /// round(_b[L`i'.lvaw],.001)/round(_se[L`i'.lvaw],.001) di "Coefficient for Polity is " round(_b[polity2_cen],.001) " with SE of " round(_se[polity2_cen],.001) " & t-stat of " /// round(_b[polity2_cen],.001)/round(_se[polity2_cen],.001) } ** EXCLUDING 2 years before reform sort cowcode year by cowcode : gen exclude = f1.reform~=1 & f2.reform~=1 ** And year of reform xtreg lninfl l.lninfl l`i'.lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /* ib4.decade*/ if sample & exclude==1 & reform==0, fe cl(cowcode) ** EXCLUDING 2 years after reform as well sort cowcode year by cowcode : replace exclude = 0 if l1.reform==1 | l2.reform==1 ** And year of reform xtreg lninfl l.lninfl l`i'.lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl /* ib4.decade*/ if sample & exclude==1 & reform==0, fe cl(cowcode) ** TABLE APPENDIX 5 ** SUREG reg3 (logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade i.cowcode if sample) (lninfl l.lninfl lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl i.cowcode /* ib4.decade*/ if sample) , endog(lninfl) *** SUEST reg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade i.cowcode if sample , est store tab1_1 reg lninfl l.lninfl lvaw l.logdm2 l.lngdp l.dgdp_k l.openness polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl i.cowcode /* ib4.decade*/ if sample , est store tab1_5 suest tab1_1 tab1_5 , vce(cl cowcode) ** TABLE APPENDIX 5 - alternative estimators xtpcse lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample , pairwise est store tab6_3 xtreg inflation l.inflation l.dm2_new l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// l.wdgdpdefl if sample & inflation<150 , fe cl(cowcode) est store tab6_4 xtpcse logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region /// ib4.decade if sample , pairwise est store tab6_1 xtreg dm2_new l.dm2_new l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region ib4.decade /// if sample & dm2_new<150 , fe cl(cowcode) est store tab6_2 ** TABLE APPENDIX 6 - inflation targeting and deposit interest rate xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region it /// l.wdgdpdefl if sample , fe cl(cowcode) xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region it /// ib4.decade if sample , fe cl(cowcode) xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region l.deposit /// l.wdgdpdefl if sample , fe cl(cowcode) xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_cen xrdum l.fiscal_balance pres_only leg_only pres_leg i.region l.deposit /// ib4.decade if sample , fe cl(cowcode) ** IT AND DEPOSIT FIGURES xtreg lninfl l.lninfl l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region it /// l.wdgdpdefl if sample , fe cl(cowcode) int2way , x(lvaw) z(polity2_trans) zval(0/20) zlabel("Polity IV Score") xlabel(CBI) dvlabel(Inflation) level(90) xtreg logdm2 l.logdm2 l.lngdp l.dgdp_k l.openness c.lvaw##c.polity2_trans xrdum l.fiscal_balance pres_only leg_only pres_leg i.region it /// ib4.decade if sample , fe cl(cowcode) int2way , x(lvaw) z(polity2_trans) zval(0/20) zlabel("Polity IV Score") xlabel(CBI) dvlabel("Change in M2") level(90)