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
2
Q
What are time specific effects?
A
Error components that are simmilar across time periods, ex low inflation, high returns
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