I want to interpret the output of a fixed effects regression and need help with interpreting the country-fixed effects. The regression is the following:
pm.alldata <- pdata.frame(alldata , index = c("country", "year") ) a.fixedtwo <- plm(log(production) ~ log(temp) + log(rain) + drought + flood + storm + log(labour) + log(fertilizer) +log(capital) +log(area) , data = pm.alldata, model = "within", effect = "twoways")
The dependent variable is agricultural production. I want to look at how temperature and precipitation affect agricultural production (although this is rather irrelevant to the question I have). The country fixed effects refer to 28 countries. The county-fixed effects are as follows:
As I understand it, we can say that country 5 (Ecuador) has an unobservable negative effect (-5,99469) on agricultural production. Am I right?
Now I come to my main question: I have divided these 28 countries into two subgroups (poor and rich countries). If I regress only the 14 poor countries, the coefficients of the country-fixed effects change to the following:
Now the effect of country 5 (Ecuador) is suddenly positive (7.5768). This would mean that Ecuador has positive unobservable effects on agricultural production. Is it normal for the signs to change when this is subdivided into a subgroup?Which of the two values of Ecuador should I use for interpretation when comparing the value of Ecuador with the value of a rich country (e.g. Argentina)?