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st: fixed effects and random effects

From   Sunil W <>
Subject   st: fixed effects and random effects
Date   Tue, 30 Nov 2004 09:59:44 -0800 (PST)

I have a couple of questions:

One, when I run a random effects model on my data, I
get sigma_u =0.  How do I interpret this? Does it mean
that the  random effects model is not appropriate for
this data? The fixed effect model seems to work fine.

Two, I have an unbalanced panel data in which the
number of observations per firm ranges from 1 to 60.
Would this lead to any bias in my fixed effects
estimates, especially since some firms have only 1
observation? If so, how do I get around the problem?


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