Testing for slope heterogeneity bias in the fixed-effects estimator

Abstract

In this article, we discuss a postestimation command, xthbtest, to test for the validity of the fixed-effects estimation in the presence of heterogeneity in panel-data settings. The procedure is based on the conditions to obtain the mean effect across individuals by comparing it with the mean-group alternative estimator. An empirical application with a Solow-type growth model illustrates its implementation.

Keywords

st0793 xthbtest panel data fixed effects heterogeneity

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