Dear all,
I understand that including mean group variables in a random effect regression is useful to meet the orthogonality conditions, but I am much less confident about how these coefficients should be interpreted in a static panel regression. I work with country polled time series and examine the influence of female employment on child poverty. the within effects obtained either by a fixed effect estimation or a random effect including the mean group variables suggest a positive association, while the coefficient of the mean group variables is strongly negative. I understand that this coefficient is the difference between the between and the within effect, but have not seen fully convincing interpretation of these mean group coefficients (some authors seem to suggest that it reflects the long-run relationship between the two variables). So my question is simple: should we interpret the mean group coefficients and how? This will make a huge difference in my case? Many thanks in advance,
I understand that including mean group variables in a random effect regression is useful to meet the orthogonality conditions, but I am much less confident about how these coefficients should be interpreted in a static panel regression. I work with country polled time series and examine the influence of female employment on child poverty. the within effects obtained either by a fixed effect estimation or a random effect including the mean group variables suggest a positive association, while the coefficient of the mean group variables is strongly negative. I understand that this coefficient is the difference between the between and the within effect, but have not seen fully convincing interpretation of these mean group coefficients (some authors seem to suggest that it reflects the long-run relationship between the two variables). So my question is simple: should we interpret the mean group coefficients and how? This will make a huge difference in my case? Many thanks in advance,
Comment