Consider the Time and Entity Fixed Effect Model with a Single

question 39

Essay

Consider the time and entity fixed effect model with a single explanatory variable
Y_it = β₀ + β₁X_it + $\gamma _ { 2 }$ D2_i + ... + $\gamma _ { n }$ Dn_i + δ₂B2_t + ... + δ_TBT_t + u_it,
Assume that you had estimated the above equation by OLS. Typically the coefficients for the entity and time binary variables are not reported. Can you think of situations where the pattern of these coefficients might be of interest? What could you do, for example, if you had a strong theoretical justification for believing that a few macroeconomic variables had an effect on Y_it?

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Definitions:

Soft Palate

The Soft Palate is the soft tissue constituting the back of the roof of the mouth, separating the mouth from the nasopharynx, and is crucial in swallowing and speech.

Hard Palate

The bony front part of the palate forming the roof of the mouth, separating the oral and nasal cavities.

Nasal Cavity

The nasal cavity is a large air-filled space behind the nose, involved in breathing, filtering, warming, and humidifying inhaled air; it also houses olfactory receptors involved in the sense of smell.

Pharynx

The Pharynx is the part of the throat behind the mouth and nasal cavity, leading to the esophagus and larynx, involved in breathing and swallowing.