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  • unit root test short panel

    Hi guys,
    I was wondering if it is possible to test for unit root on a T=2 panel dataset. I only have 2 t's and so all errors say insufficient observations. If I can not test for a unit root, can I make any assumptions given my t=2?
    The context of this is i am measuring effects of RD intensity on sales growth. One of my explanatory variables is lagged sales . For all the regressions I run lagged sales has a negative correlation with sales growth. Can I make any implications given this result?
    Thank you

    MY N=500 T=2
    Last edited by nadia taylor; 02 Apr 2021, 03:51.

  • #2
    No, you shouldn't worry about a unit root where T = 2 and N is large relative to T.

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    • #3
      Originally posted by Justin Niakamal View Post
      No, you shouldn't worry about a unit root where T = 2 and N is large relative to T.
      Mr. Niakamal you had commented that "N is large relative to T". If N=3000 and T=14, is your argument still valid? Can I ignore unit root test in my research?

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