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Re: st: Fixed effects - not quite invariant variables?

From   "Justina Fischer" <>
Subject   Re: st: Fixed effects - not quite invariant variables?
Date   Mon, 15 Oct 2012 10:48:32 +0200


why don't you first test (Hausman) whether the model with FE is preferred over the model with RE?
maybe you are lucky and can avoid the FE approach.

-------- Original-Nachricht --------
> Datum: Mon, 15 Oct 2012 08:17:11 +0000
> Von: fernando luiz mistura <>
> An: Stata <>
> Betreff: st: Fixed effects  - not quite invariant variables?

> Hi,
> I have an unbalanced panel data with 180 observations. Data is for 56
> countries for the years 1997, 2003, 2006, 2010. I want to see what is the
> effect of an Index variable of FDI restrictions that ranges between 0 and 1 in
> the level of countries' FDI. Under Pooled OLS and Random Effects, the index
> variable is significant as expected.
> My problem is with fixed effects. The index variable for some contries do
> not change, as countries have liberalised in a period earlier that the one
> covered. For other countries, there are either small or large changes.
> Hence, under Fixed Effects however, the Index variable is not significant and
> the coefficients smaller. 
> Could someone please explain me if the FE would still be appropriate even
> with this type of semi-variant variable? And if this issue could be
> addressed with an Instrumentral variable approach (hausmann taylor) even if its
> not a endogenous variable?
> Many thanks
> Fernando  		 	   		  
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