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encode Municipality, gen(municipality1)

*inform stata that your data is panel
xtset municipality1 Year

*know your variables
des EconomicDynamism GovernmentEfficiency Infrastructure Resiliency
xtsum EconomicDynamism GovernmentEfficiency Infrastructure Resiliency


* test for linearity/associations of the variables
pwcorr EconomicDynamism GovernmentEfficiency Infrastructure Resiliency, star (0.05)sig  
*independent variables are signficantly associated to the dependent variable


*test for multicollinearity 
reg EconomicDynamism GovernmentEfficiency Infrastructure Resiliency 
vif
*based on the results, the model is not suffering from severe multicollinearity


*panel regression where economic dynamisn is a function of Govt Efficency, infra, resillency
reg EconomicDynamism GovernmentEfficiency Infrastructure Resiliency
xtreg EconomicDynamism GovernmentEfficiency Infrastructure Resiliency, fe
estimates store fixed

*hausmas test (fe or re?)
xtreg EconomicDynamism GovernmentEfficiency Infrastructure Resiliency, re
estimates store random
hausman fixed random

*since hausman is less than five 5%, then FE is appropriate
* TIME effects test

xtreg EconomicDynamism GovernmentEfficiency Infrastructure Resiliency i.Year, fe
testparm i.Year
*prob>F is less than 0.05 indicating that we will reject the null that the coefficients for all years are jointly equal to zero, hence therre is time fixed-effects needed in the model. 

xtreg EconomicDynamism GovernmentEfficiency Infrastructure Resiliency i.Year, fe

*cross sectional dependence
xtcsd, pesaran abs
*base on the result, there is no cross sectional dependence

*presence of heterokedasticity is only for FE
xtreg EconomicDynamism GovernmentEfficiency Infrastructure Resiliency i.Year, fe
xttest3
*based on the result, since it is significant, the model is suffereing from heteroscedasticity


*serial correlation
xtserial EconomicDynamism GovernmentEfficiency Infrastructure Resiliency 
*based on the result, there is 1st order autocorr. 

*PCSE was used to address the problem on hetero and 1st order autocorr
xtpcse EconomicDynamism GovernmentEfficiency Infrastructure Resiliency i.Year