Hello, I am working with 10years and 46 countries data. All is fine until I tried the Hausman test. I realized that the random effect model estimates all my variables with collinearity issues but fixed effect drops 4 of my dummy variables because of collinearity. The Hausman test predicts fixed effect model as the best model. My question is, should I run the analysis without the variables being dropped because of colinearity in the fix-effect model or I should analyze with them since they will be dropped so that both models can have the same number of independent variables?

Thank you

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