Solved by Expert Tutors
Solved by Expert Tutors

Consider for example, the fixed effect panel model given byyit = x0itβ

+ αi + εit i = 1, · · · , n; t = 1, · · · , Twhere data have been collected on n cross-sectional units over T time periods. Here yitis a variable we are trying to ‘explain’, αi captures the ‘fixed-effects’ peculiar to eachcross-section that presumably do not change over time, xit is a k-dimensional vector of‘explanatory’ variables, β are the corresponding coefficients and finally εit are iid shocks.In these models, usually it is the βj ’s that are of interest. Show that if that is the case,we could obtain their OLS estimates by regressing yit − yi. on the variables in xit − xi.,where for any variable zit, zi. = 1/T PTi=1 zit

Sign up to view the entire interaction

Step-by-step answer

entesque dapibus efficitur laoreet. Na

, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dic

OLS Estimator-Fixed Effects.docx
ng elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficit ctum vitae odio. Donec ec facilisis. Pellentesque dapi sus ante, dapibus a molestie consequat, ultri icitur

Subscribe to view the full answer

Subject: Business, Economics

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Let our 24/7 Economics tutors help you get unstuck! Ask your first question.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes