Something that I'd like to add. Sigma square a =0 does not necessarily mean that a is not present.we can delete it. It just means that variance of a across individuals is zero. There is no individual specific effect. In which case we can just use a simple OLS model .a plays no role in analysis.
You can remodel the original equation by taking avgs. of the variables. Then multiply this eqn. by lambda . Then subtract this new equation from the original one.
The sigma(u) term indicates the idiosyncratic error, which means that it changes both over time and individual, if this term equals to zero, why we need the control variables? I am not sure whether my answer is right. This is just my consideration.
This video made me understand the relationship between FE, RE and OLS. Awesome video
Ben I'm gonna be honest, you're the boss of econometrics
Thanks, Ben. This series of video has helped me a lot with econometrics. Highly appreciated!
This guy is an absolute legend
Very good series of panel regression. Ben made the subject very clear! Thank you!
very explanatory!!! the video is AWESOME !!!
Thank you for making these videos! They are really helpful.
Incredibly valuable videos, thank you
Great video mate, I've been struggling with RE but this makes a lot of sense.
Very straight forward. Thank you
Very clear teaching!
how can we calculate variance of "u" and variance of "alpha", in orher words how can we calculate the "Ui" and "ALPHAit)
This is a great explanation, thank you
Really helps a lot. Great speaker!
Great explanation thank you!
Something that I'd like to add. Sigma square a =0 does not necessarily mean that a is not present.we can delete it. It just means that variance of a across individuals is zero. There is no individual specific effect. In which case we can just use a simple OLS model .a plays no role in analysis.
Great addition. Made it easier to understand.
Great content! all questions answered. Thank you
Great explanation!
How did you got that lambda equation?_?
You can remodel the original equation by taking avgs. of the variables. Then multiply this eqn. by lambda . Then subtract this new equation from the original one.
in the case that RE=FE, why we just assume that T*Sigma(alpha) is equal to infinity and we don't assume that sigma(u) can be equal to zero? thanks
The sigma(u) term indicates the idiosyncratic error, which means that it changes both over time and individual, if this term equals to zero, why we need the control variables? I am not sure whether my answer is right. This is just my consideration.
Thank you so muh!
fantastic
cool
Who is T?
+Alvaro Moreira t = 1, 2, ...., T
I'd prefer a less mathematical explanation :-/