Question: Take the fixed effects model Yi t Xi t1 X2 i t2 ui i t . A researcher estimates the model by first

Take the fixed effects model Yi t Æ Xi t¯1 Å X2 i t¯2 Åui Å"i t . A researcher estimates the model by first obtaining the within transformed ˙ Yi t and ˙X i t and then regressing ˙ Yi t on ˙X i t and ˙X 2 i t . Is the correct estimation method? If not, describe the correct fixed effects estimator.

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