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st: fixed vs random effect model

From   "Airey, David C" <david.airey@Vanderbilt.Edu>
To   "" <>
Subject   st: fixed vs random effect model
Date   Sun, 4 Jul 2010 10:30:02 -0500


How can such a test tell you whether to treat a factor as fixed or random? It can only tell you about efficiency of the model. It is you who have to decide in advance what your hypothesis is and whether you want to know about those particular levels or not. Or is the choice in fixed versus random effects regression in econometrics more about the efficiency of estimation rather than interpretation?

> Good day Stata-listers,
> I'm apoloziging is the question may seems elementary for many of you,
> but i really need to check this before going on in my analysis. i'm
> running a panel data regression and after performing the haussman test
> the conclusion was that my model is a fixed effect one. The problem is
> located on my explanatory variables which display week variations, and
> as it is well known fixed effect model gives weak results in a such
> case. So should 'i use the random effect instead???

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