Fixed effects model with three time periodsConsider the following general fixed effects model for use with a panel data set with three time periods (T = 3):yir = 51 +82 d2: +63 d31 + ẞ1x11 + ... + ẞkxisk + Vitwhere, for t=1, 2, 3, and time period 1 is the base year:yir = value of dependent variable y for i, in year t, in poundsd2, 1 in the second time period (t = 2), and 0 otherwised3, =1 in the third time period (t = 3), and 0 otherwiseXirl,..., Xink value of explanatory variables for individual i at time fVir = composite error consisting of the unobserved, time-constant effect (a) and the idiosyncratic error (uir)If there are 106 cross-sectional units in your balanced panel data set, then the total number of observations you have in your data set isFor the first time period (1), the intercept isWhich of the following would cause pooled OLS estimation of the model to yield biased and consistent estimators? Check all that apply.Measurement error in any explanatory variable under the classical errors in variables (CEV) assumptiona, being uncorrelated with XitOmitting a time-varying variable that influences y and is correlated with one of the explanatory variables

The fixed effects model is a widely used approach in econometrics for analyzing panel data, where…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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