Emanuele Canegrati wrote:
> I am analyzing a panel data of firms for years 1978, 1988, 1998, 2003. The total number of firms changes across years and, as a consequence of several mergers and acquisitions, I have very few examples of firms existing in all the four years.
>
> I also think that the total number of firms does not change randomly, but it is due to some endogenous factor (i.e. political reforms which incentive firms to merge or to go public).
>
> Could you please tell me which are the econometric problems I could face with such an unbalanced panel? Is there any way to correct it?
If by 'endogenous factors', you mean variables correlated with the
error term, most probably because they have been omitted, a good
solution would be to include them, in this case as dummy variables.
--
Clive Nicholas
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"My colleagues in the social sciences talk a great deal about
methodology. I prefer to call it style." -- Freeman J. Dyson.
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