Hello,
In a model I am developing I need to enter around 6000 fixed effects , so I am considering using areg following advice I received here.
However, when you predict following a reg with dummy variables and areg with fixed effects absorbed the coefficients for the non absorbed variables are the same in the two models, but the predicted values are different. I think this is because of the constant. The Stata guidance states that "the intercept that makes the prediction calculated at the means of the independent variables equal to the mean of the dependent variable: y = xb "
How then do we interpret the predictions from the areg model and its difference from the predictions from a reg model?
In a model I am developing I need to enter around 6000 fixed effects , so I am considering using areg following advice I received here.
However, when you predict following a reg with dummy variables and areg with fixed effects absorbed the coefficients for the non absorbed variables are the same in the two models, but the predicted values are different. I think this is because of the constant. The Stata guidance states that "the intercept that makes the prediction calculated at the means of the independent variables equal to the mean of the dependent variable: y = xb "
How then do we interpret the predictions from the areg model and its difference from the predictions from a reg model?
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