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st: between and fixed effects estimators

From   "Indradeep Ghosh" <[email protected]>
To   [email protected]
Subject   st: between and fixed effects estimators
Date   Mon, 29 Nov 2004 21:13:18 +0000

hi all
stata's online faq section makes the following claim :

suppose i have panel observations on x and y and i compute within-group averages of x (call this "avgx") and deviations of x from avgx (call this "deltax"), and i run

xtreg y avgx deltax, re ....................(1)

then the coefficient on avgx should be the between estimator (obtained by running "xtreg y x, be") and the coefficient on deltax should be the within estimator (obtained by running "xtreg y x, fe").

however, when i try (1), i get different estimators (numerically, i.e.) from the ones i get by using the "fe" and "be" options. has anyone encountered this before? if so, do you have any explanation for these differences? does it have anything to do with the fact that i am working with an unbalanced panel? many thanks.

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