Re: st: Fixed Effects estimation with time-invariant variables

[David Jacobs <jacobs.184@sociology.osu.edu>]

If you create interaction terms between between three of the four possible 
dummies computed on your periods and multiply these dummies by one of your 
time invariant explanatory variables, your fixed-effects equation will 
produce estimates for these interacted "ex" time-invariant effects.  See 
Charles Halaby's piece on panel estimation in an Annual Review of Sociology 
about two to four years ago.

Dave Jacobs

At 01:56 PM 7/26/2005 +0100, you wrote:

> Fixed Effects estimation with time-invariant variables
>
> I have a problem and I wonder whether anyone can help. I have a panel
> dataset of 32 Sub-Saharan African countries and four time periods
> (N=32, T=4). I am looking at the determinants of aid for these
> countries. Given that they are not randomly selected countries, I am
> using Fixed Effects. However, I have a few time-invariant variables
> that are important but that get dropped because of using FE.  Is there
> any way of obtaining estimates for these time-invariant variables and
> still use FE?  Also, given the data I'm using, is there any
> justification for using Random Effects?
>
> Any comments would be much appreciated.
>
> Thanks.
> Joana
>
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