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"In addition, fixed effects models do not control for omitted variables."
I see such statements quite often. I think there is a confusion around this 1/
http://www.robertkubinec.com/post/fixed_effects/">https://www.robertkubinec.com/post/fixe...
I see such statements quite often. I think there is a confusion around this 1/
http://www.robertkubinec.com/post/fixed_effects/">https://www.robertkubinec.com/post/fixe...
People use "fixed effects" to mean
1) You include some kind of dummy in the regression that you run, or
2) There are unobserved variables in the real world, constant e.g. for each individual over time, that impact some X and some Y
1) You include some kind of dummy in the regression that you run, or
2) There are unobserved variables in the real world, constant e.g. for each individual over time, that impact some X and some Y
The difference between 1) and 2) is stark. You can always do 1). But 2) is a question of knowledge and assumptions. See this thread: https://twitter.com/juli_schuess/status/1253298897562357760?s=20">https://twitter.com/juli_schu...
