Elluminate09-29-11

# Elluminate09-29-11 - › 40 individuals N = 40 › 30 time...

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Problem Setup First, we set up a production function with four  inputs ( 29 [ ] 1 2 10 15 5 1.5 0.75 0.06 0.10 0.02 0.06 0.35 0.12 0.008 0.10 0.12 0.50 0.014 0.02 0.008 0.014 0.10 f x x x Ax A α = + = - - = - -
Inputs 1, 2, and 3 are variable inputs whose  levels are determined by relative prices. Input 4 is the quasi-fixed input (capital) which  yields the individual effect (both random and  fixed). We assume initially that input 4 is unobservable.

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In this sample, we draw 1200 observations.
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Unformatted text preview: › 40 individuals ( N = 40) › 30 time periods ( T = 30) Start by estimating the Covariance estimator as we did for the fixed effects model (or the within estimator). 1 40 40 1 1 ˆ CV i i i i i i X QX X Qy β-= = ′ ′ = ÷ ÷ ∑ ∑ Next, we estimate the between estimator ( 29 ( 29 ( 29 ( 29 1 40 40 1 1 i i i i i i x x x x x x y y β-= = ′ =---- ÷ ÷ ∑ ∑...
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## This note was uploaded on 11/08/2011 for the course AEB 6184 taught by Professor Staff during the Spring '09 term at University of Florida.

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Elluminate09-29-11 - › 40 individuals N = 40 › 30 time...

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