Cross Validated Asked by Isobel M on December 11, 2021
I have a panel dataset covering observations from the same individuals over six time periods (unbalance panel). I am interesting in estimating the change in a continuous dependent variable (i.e. body mass index – BMI) for each time period.
My reading of the literature led me to Fixed Effects and Random Effects. Intuitively I thought FE would work best given I know I have omitted variables (e.g. income, education, genetic disposition), which are time-invariant as is their impact on the individual (given the individuals are 65+ I presume income and education will stay the same).
BMI = Intercept + B1(Age) + B2(Municipality) + B3(Measurement Period), where Measurement period is a categorical variable.
When I run this in R using FE, I get statistically significant results that make sense. However, I have queries as to whether this is the right approach given:
Any feedback would be greatly appreciated!
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