kiinteäefektimalli

Kiinteäefektimalli refers to a fixed-effects model in statistical analysis. This type of model is used when researchers want to control for unobserved, time-invariant heterogeneity across different entities, such as individuals, firms, or countries. The core idea is to estimate the effects of independent variables on a dependent variable while holding constant the characteristics of these entities that do not change over time.

In a fixed-effects model, a separate intercept term is estimated for each entity. These entity-specific intercepts capture all time-invariant characteristics of the entity, whether they are observable or not. This allows for a more accurate estimation of the relationships between the independent and dependent variables, as it removes the potential confounding influence of these unobserved differences. The model is particularly useful in panel data analysis, where observations are collected for the same entities over multiple time periods.

The primary advantage of using a fixed-effects model is its ability to mitigate bias that can arise from omitted time-invariant variables. By controlling for these unobserved factors, the model provides a more reliable estimate of the causal effect of the independent variables. However, fixed-effects models cannot estimate the effects of time-invariant independent variables, as their influence is absorbed by the entity-specific intercepts. Despite this limitation, it remains a powerful tool for analyzing panel data and understanding relationships within and across entities.