In Section 17.14 it is described how to estimate the individual-effect variance 2 u using the between residuals. Develop an alternative estimator of 2 u

In Section 17.14 it is described how to estimate the individual-effect variance ¾2 u using the between residuals. Develop an alternative estimator of ¾2 u only using the fixed effects error variance b¾

2"

and the levels error varianceb¾

2e

Æ n¡1PN iÆ1 P

t2Si be2 i t where bei t Æ Yi t ¡X0 i t b¯fe are computed from the levels variables.