Question
In: Statistics and Probability
What is the role of control variables in a fixed-effects model?
What is the role of control variables in a fixed-effects model?
Solutions
Expert Solution
The role of control variables in a fixed effects model is a statistical model in which the model parameters are fixed or non-random quantities. This is in contrast to random effects models and mixed models in which all or some of the model parameters are considered as random variables. In many applications including econometrics and biostatistics a fixed effects model refers to a regression model in which the group means are fixed (non-random) as opposed to a random effects model in which the group means are a random sample from a population. Generally, data can be grouped according to several observed factors. The group means could be modeled as fixed or random effects for each grouping. In a fixed effects model each group mean is a group-specific fixed quantity.
In panel data where longitudinal observations exist for the same subject, fixed effects represent the subject-specific means. In panel data analysis the term fixed effects estimator (also known as the within estimator) is used to refer to an estimator for the coefficients in the regression model including those fixed effects (one time-invariant intercept for each subject).
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orchestra answered 2 years agoRelated Solutions
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