If you interact the time-invariant variables with, say, year effects,
you can estimate the difference in the partial effects of the
time-invarant variables relative to a base period (see wooldridge,
chapter 10).
MM
On 7/27/05, ALICE DOBSON <[email protected]> wrote:
> I do not understand why one would do that? Rather, what purpose would it
> serve?
> Best,
> Alice
>
> >From: David Jacobs <[email protected]>
> >Reply-To: [email protected]
> >To: [email protected]
> >Subject: Re: st: Fixed Effects estimation with time-invariant variables
> >Date: Tue, 26 Jul 2005 16:08:11 -0400
> >
> >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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