>Are you sure they should vary? I don't have books with me but isn't
>eta summed over all the time periods (for each individual) for
>- -predict var, u- and predict var, m- making the predictions time
>invariant?
>Scott
Dear Scott,
thank you! You're right, the estimates for u really shouldn't vary if one examines the formula properly. :-)
But I still don't understand what sense time invariant u-estimates make in a time-variant model. For if I use any other way to calculate cost efficiency than -predict var, te- the efficiency won't vary with time because of the invariant u's. And if one considers the logic behind the model, the u's are the only cause of the time-variant efficiency scores...
SFA seems to be too intricate for me, sorry :-(
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