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st: RESET with fixed effects


From   Bruno Rocha <bruno.j.rocha@gmail.com>
To   statalist <statalist@hsphsun2.harvard.edu>
Subject   st: RESET with fixed effects
Date   Wed, 14 Sep 2011 17:31:54 +0100

Dear statalisters, hello,

I have implemented a panel FE model and I would like to implement a
RESET test to see if the linear specification of the model is correct.
However I don't know whether I should include the country and year
fixed effects in the fitted values computed from the original
equation. Here http://www.stata.com/statalist/archive/2009-09/msg01236.html
it is suggested that data should be demeaned and then perform the
test.

Would it be wrong to compute the squared fitted values using the FE? A
possible objection arises from the fact that the coefficients of
country dummies are in principle inconsistent (as T is only 8 and
N=27).

Many thanks for your attention,
Best regards
Bruno Rocha
(Phd student -- University of Essex)
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