Dear all
I include 21 year dummies and run a fixed effect model and a random effect
model, the Hausman test prefers random effect model with probability of 1.
xtreg y x1 x2 dummy1986-dummy2006, fe robust i(country)
estimates store fixed
xtreg y x1 x2 dummy1986-dummy2006, re robust i(country)
hausman fixed
Test: Ho: difference in coefficients not systematic
chi2(31) = (b-B)'[(V_b-V_B)^(-1)](b-B) = 2.37
Prob>chi2 = 1.0000
(V_b-V_B is not positive definite)
I guess the probability 1 shows there is something wrong. Does anybody know what
might be the problem?
Any comments are appreciated. Thanks for your help.
Best Wishes,
Linda
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