Question

One of the following is a regression example for which Entity and Time Fixed Effects could be used: ________

Answer 1

Answer:

b

Step-by-step explanation:

The regression which comprises of both entity & time effect can be expressed as;

$Y_{it} = B_1X_{it} + \alpha_i + \lambda_i + \mu_{it}$

Where;

take charge of the state-explicit qualities that don't change over the long run

 controls the variables that differ after some time yet not across substances,

$u_{it}$ controls state-specific qualities which shift after some time.

Thus, from the options given above:  

The first option lacks or does not involve the time effect as we are only looking for a particular year.

The second option comprises only 2 years of data which implies that we have a time effect involved. In addition to that, there exist a few variables in executing measurements that join fixed effects. In this case, we can utilize regression with time and fixed effect.

(c) The information here is quarterly over an extended period of time. Hence, it would prefer a period arrangement information than a fixed and time impact information. Thus, this is incorrect.

(d) Since no time variable is associated, we reject the option.