Abstract
As noted in the introductory chapter, the simplest and most intuitive way to account for individual and/or time differences in behaviour, in the context of a panel data regression problem, is to assume that some of the regression coefficients are allowed to vary across individuals and/or through time. The regression coefficients are unknown, but fixed parameters. When these are allowed to vary in one or two dimensions, we speak of a fixed effect model (or fixed coefficient model).
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References
Aigner, D.J. and Balestra, M. [1988]: Optimal Experimental Design for Error Components Models, Econometrica, vol. 56, No. 4, (July 1988) 955–971.
Hsiao, C. [1986]: Analysis of Panel Data, Cambridge University Press, Cambridge
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© 1992 Kluwer Academic Publishers
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Balestra, P. (1992). Fixed Effect Models and Fixed Coefficient Models. In: Mátyás, L., Sevestre, P. (eds) The Econometrics of Panel Data. Advanced Studies in Theoretical and Applied Econometrics, vol 28. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-0375-3_3
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DOI: https://doi.org/10.1007/978-94-009-0375-3_3
Publisher Name: Springer, Dordrecht
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