Which of the following is true about fixed effects models? A) We cannot use fixed effects models when we suspect there are fixed effects but no such effect exists ($\alpha$_i=0 for all units) B) Fixed effects models cannot generate a coefficient on a variable that is constant within all units. C) Fixed effects will generate a coefficient on a variable as long as that variable differs across units. D) A fixed effects model is not possible when there are a large number of units in the model.

Question

Quizplus · Accepted Answer

Fixed effects models cannot estimate coefficients for variables that do not vary within units, as these effects are absorbed by the fixed effects.

Which of the Following Is True About Fixed Effects Models α\alphaα

Which of the Following Is True About Fixed Effects Models $\alpha$