Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Because fixed effects allows arbitrary correlation between and the, while random effects does not, FE is widely thought to be a more convincing tool for

Because fixed effects allows arbitrary correlation between and the, while random effects does not, FE is widely thought to be a more convincing tool for estimating ceteris paribus effects. Let's say you are concerned about the correlation between and the key explanatory variable that is constant over time. Then what is your modeling strategy? Use FE or RE?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Stochastic Calculus And Applications

Authors: Samuel N Cohen, Robert J Elliott

2nd Edition

1493928678, 9781493928675

More Books

Students also viewed these Mathematics questions