st: Hausman test, rank of the differenced variance matrix, (V_b-V_B is not positive definite)

[Massimiliano Sassone <massimilianosassone@gmail.com>]

Dear all,

I ran the Hausman test to check which method, between fixed and random
effects, is more appropriate.
I'm using Stata 11 to analyze a panel dataset composed of 279
observations, derived from 31 regions over a 9-year period.

When I run the test, apart from the (V_b-V_B is not positive definite)
note at the bottom, I also incur in the following note:"the rank of
the differenced variance matrix (8) does not equal the number of
coefficients being tested (9)."

I tried to run the test with the sigmaless/sigmamore options, as
recommended in previous posts, and the (V_b-V_B is not positive
definite) note disappears.

I couldn't understand the meaning of the second note, the one
regarding the rank of the differenced variance matrix.

How is this interpreted? Does it represent a problem in the model?

Could anybody give me a hint?
It would be greatly appreciated.

Thank you very much

Massimiliano (Max) Sassone
*
*   For searches and help try:
*   http://www.stata.com/help.cgi?search
*   http://www.stata.com/support/faqs/resources/statalist-faq/
*   http://www.ats.ucla.edu/stat/stata/