Question: 2. Consider a model which combines some elements of the individual effects model and some elements of the pooled model. The intercept and some of

2. Consider a model which combines some elements of the individual effects model and some elements of the pooled model. The intercept and some of the regression coefficients vary across individuals, but other regression coefficients do not. That is, yi D Xiþi C Wi C "i where the explanatory variables with varying coefficients are located in Xi and the explanatory variables with constant coefficients are located in Wi . Write out a Gibbs sampler for carrying out Bayesian inference in this model. Discuss how you might test which explanatory variables have constant coefficients.

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