To obtain an estimator that reproduces the fixed effects estimates on the time-varying explanatory variables, _____.
A)one must check whether the time-demeaning allows one to interpret the estimates
B)one must check whether time-constant variables can be included in the fixed effects
C)one must be able to interpret the time variations
D)one must be careful in constructing the time averages

Question

To obtain an estimator that reproduces the fixed effects estimates on the time-varying explanatory variables, _____.
A)​one must check whether the time-demeaning allows one to interpret the estimates
B)​one must check whether time-constant variables can be included in the fixed effects
C)​one must be able to interpret the time variations
D)​one must be careful in constructing the time averages

Quizplus · Accepted Answer

To obtain an estimator that reproduces the fixed effects estimates on the time-varying explanatory variables, one must be careful in constructing the time averages. This is because the time averages must be constructed in such a way that they remove any time-invariant heterogeneity across individuals, allowing the resulting estimator to isolate the effect of the time-varying explanatory variables on the outcome.

To Obtain an Estimator That Reproduces the Fixed Effects Estimates