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  • Time invariant variables in fixed effects model

    Hi,

    I am currently doing an econometrics project (due in 6 days' time). When I run fixed effects regression in Stata, the time invariant dummy variable in my model (whether a country is a Latin American country or not) of course gets omitted, and when I run random effects it doesn't. However when I run a Hausman test it says fixed effects is the better model. The time invariant dummy (Latin) is one of my main variables of interest, so how should I go about all this? Do I use random effects instead? Or some other regression for panel data?

    I know similar questions have been asked but I can't seem to find an answer about what exactly to do about it!

    Many thanks,
    Riaz

  • #2
    Riaz:
    welcome to this forum.
    As per FAQ, you should be aware of that questions related to class/hoework assignments are not welcomed on this forum.
    That said, you may want to take a look at https://blog.stata.com/2015/10/29/fi...dlak-approach/.
    Kind regards,
    Carlo
    (StataNow 18.5)

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