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Consider the following decomposition of the error term: v = a +u it i it and the second part (uit) caputres_ The first part

Consider the following decomposition of the error term: v = a + u it i it and the second part (uit) caputres_

Consider the following decomposition of the error term: v = a +u it i it and the second part (uit) caputres_ The first part of this error term (ai) caputres homoskedasticity, heteroskedasticity time constant unobserved factors, time varying unobserved factors heteroskedasticity, homoskedasticity time varying unobserved factors, time constant unobserved factors

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