# Re: RE : st: a simple panel data question: FE and RE

 From "yjh jsh" To statalist@hsphsun2.harvard.edu Subject Re: RE : st: a simple panel data question: FE and RE Date Sun, 3 Aug 2008 10:49:23 -0400

```thanks for this. could you be kind enough to let me know how I can
calculate the variance decomposition in STATA?
thanks a lot

2008/8/2 Gaulé Patrick <patrick.gaule@epfl.ch>:
> It might be useful to do a variance decomposition to see how much of the variance is due to the cross-sectional dimension and how much is due to the time dimension.
>
> If much of the variance comes from the cross-sectional dimension, you could use the between estimator or simply pooled OLS with clustered standard errors.
>
> Patrick Gaulé
>
> ________________________________________
> De : owner-statalist@hsphsun2.harvard.edu [owner-statalist@hsphsun2.harvard.edu] de la part de yjh jsh [jshyjh1@gmail.com]
> Date d'envoi : samedi 2 août 2008 14:20
> À : statalist@hsphsun2.harvard.edu
> Objet : Re: st: a simple panel data question: FE and RE
>
> This does helps. thanks
> For me, it seems that different "levels" of Y in units are assumed to
> be caused by those unobserved time-invariant variables. What if they
> are not?
>
> In my hypothetic case, for example, for both unit 1 and 2, we can't
> see relationship between x and y if we only consider within-variation.
> But this conceals the fact that Y takes higher value in unit 2 when 2
> takes higher value in unit 2. That is, we do see a relationship that
> higher x causes y. so, if FE a bad choice if we have a large between
> variation compared to within variation in the data?
>
> thanks
>
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>

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