Module 8: Panel data Flashcards

1
Q

What are indivudual specific effects?

A

Error components that have are fixed for a certain indivudual ex, laziness, ambition

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2
Q

What are time specific effects?

A

Error components that are simmilar across time periods, ex low inflation, high returns

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3
Q

What is a random effects model?

What are the results?

A

We have a LRM with individual specific effets that are homoscedastic but autocorrelated.
It is a random individual specific effets if the explatory variable is exogenous with respect to individual specific effets. (Error is independent of x)
Results: OLS estimator, consistent, assymptotically efficient, standard errors are consistent

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