Panel data estimation between the unemployment rate and income level are given below. Which model for this

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Panel data estimation between the unemployment rate and income level are given below. Which model for this panel estimation is appropriate, the Fixed Effect Model or the Random Effect Model? Why?

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Management Accounting Information for Decision-Making and Strategy Execution

ISBN: 978-0137024971

6th Edition

Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young

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Posted Date: Aug 18, 2023 06:48 AM

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Panel data estimation between the unemployment rate and income level are given below. Which model for this

Question:

Coefficients Unemp Inc Hausman Test Chi2(1) Prob Fixed 1.21548 2.15401 3.67 0.1553 Random Difference 0.254864 0.960616 1.976314 0.177696 Coefficients Unemp Inc Hausman Test Chi2(1) Prob Fixed 1.21548 2.15401 3.67 0.1553 Random Difference 0.254864 0.960616 1.976314 0.177696

Expert Answer:

In panel data analysis the choice between using a Fixed Effects FE model or a Random Effects RE model depends on the underlying assumptions and the na... View the full answer

Management Accounting Information for Decision-Making and Strategy Execution

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