Suppose you have a long,narrow panel of data and estimate a single equation with indicator variables and interaction terms for the individuals.In doing this what assumption from the pooled model have you relaxed?
A)coefficients on variables are equal across individuals
B)errors are uncorrelated with any x's
C)expected value of errors are zero
D)variances of error terms are equal across individuals

Question

Quizplus · Accepted Answer

By using indicator variables and interaction terms to estimate separate coefficients for each individual, we are relaxing the assumption that coefficients on variables are equal across individuals in the pooled model.

Suppose You Have a Long,narrow Panel of Data and Estimate