Econometrics HT 18
Chapter 34 : Fixed effects versus random effects
By Lund University
Two possible methods of estimating an error component model with panel data.
Fixed effects versus random effects
We look at two important estimators of the error component model, the fixed effects and the random effects model. We also look at one of the important issues when dealing with panel data, namely choosing between the fixed effect estimator and the random effects estimator.