Added-variable plots for panel-data estimation

In this article, I extend the theory of added-variable plots to three panel-data estimation methods: xed eects, between eects, and random eects. An added-variable plot is an eective way to show the correlation between an independent variable and a dependent variable conditional on other independent variables. In a multivariate context, a simple scatterplot showing x versus y is not adequate to show the relationship of x with y, because it ignores the impact of the other covariates. Added-variable plots are also useful for spotting infuential outliers in the data that aect the estimated regression parameters. Stata can display added-variable plots with the command avplot, but it can be used only after regress. My new command, xtavplot, is a postestimation command that creates added-variable plots after xtreg estimates. Unlike avplot, xtavplot can display a confidence interval around the fitted regression line.