Description: This is an overview of fixed and random effects models from an econometric perspective. We will begin by describing concerns researchers may have about unobserved factors affecting a regression. We will then describe how panel data can be used to mitigate these concerns through fixed and random effects models.
Next we will describe the assumptions that need to be met for each model to be used and describe tests that can be used to choose between the two models.
Finally, we will address how statisticians think about fixed, random, and mixed effects models and how this can differ from an econometric perspective.