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The textbook suggests an "entity-demeaned" procedure to avoid having to specify a potentially large number of binary variables for the estimation of fixed effects regression models. The idea of the "entity-demeaned" procedure was introduced as a computationally convenient and simplifying procedure. Since there are also time fixed effects, in principle, you could use the "time-demeaned" procedure. Using the following equation Yit = Bo+ B1Xit + B3S + uit, Show how B1 can be estimated by the OLS regression using "time-demeaned" variables.

The textbook suggests an "entity-demeaned" procedure to avoid having to specify a potentially large number of binary variables for the estimation of fixed effects regression models. The idea of the "entity-demeaned" procedure was introduced as a computationally convenient and simplifying procedure. Since there are also time fixed effects, in principle, you could use the "time-demeaned" procedure. Using the following equation Yit = Bo+ B1Xit + B3S + uit, Show how B1 can be estimated by the OLS regression using "time-demeaned" variables.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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The textbook suggests an "entity-demeaned" procedure to avoid having to specify a potentially large number of binary variables for the estimation of fixed effects regression models. The idea of the "entity-demeaned" procedure was introduced as a computationally convenient and simplifying procedure. Since there are also time fixed effects, in principle, you could use the "time-demeaned" procedure. Using the following equation Yit = Bo + B1Xit + B3S†+ uit, Show how B1 can be estimated by the OLS regression using "time-demeaned" variables.
Transcribed Image Text:The textbook suggests an "entity-demeaned" procedure to avoid having to specify a potentially large number of binary variables for the estimation of fixed effects regression models. The idea of the "entity-demeaned" procedure was introduced as a computationally convenient and simplifying procedure. Since there are also time fixed effects, in principle, you could use the "time-demeaned" procedure. Using the following equation Yit = Bo + B1Xit + B3S†+ uit, Show how B1 can be estimated by the OLS regression using "time-demeaned" variables.
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