Jian Zhang wrote:
> I have a question on testing random effect model against fixed effect
> model. Hope that you can help me out. Here is the question;
>
> I am applying random effect model and fixed effect model to an
> unbanlanced panel data (use xtreg, re and xtreg, fe). To test which
> model is more appropriate, I run a hausman test. However, the test
> statistics (the chi square) is negative. This makes hausman testing
> impossible, since chi square cann't be negative. The reason that hausman
> test doesn't work is that the model's error structure does not meet the
> assumptions made for the hausman test.
[...]
Did you run the following:
. xtreg ..., fe
. est store fixed
. xtreg ..., re
. hausman fixed ., alleqs constant
If not, see if that works. Works for me every time I have to use it.
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