Dear, I built the generalized method of moments model to estimate the sales rank in the bookstore using plm package in R. The equation is: data1.gmm <- pgmm(dynformula(lnsales_rank ~ ln_price + avg_ham_rate + avg_spam_rate + num_of_ham+ num_of_spam + ship_code2 +ship_code3 +ship_code4+ ship_code5+ ship_code6 + ship_ code7, lag = list(0, 0, 0, 0,0,0,0,0,0,0,0,0), log =FALSE), data=data, effect = "individual", model = "twosteps", transformation = "ld",gmm.inst = ~ ln_price, lag.gmm =2) However, error message: Error in solve.default(Reduce("+", A1)) : system is computationally singular: reciprocal condition number = 6.36689e-23" shown. I found that skipping one of the ship_code variables (dummy variable) can generate result. But don't know the reason. I found some books about using R, but no one can answer me. Please help. Thanks much. Zoe [[alternative HTML version deleted]]
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