In econometrics and statistics, a fixed effects model is a statistical model that represents the observed quantities in terms of explanatory variables that are treated as if the quantities were non-random. This is in contrast to random effects models and mixed models in which either all or some of the explanatory variables are treated as if they arise from random causes. Note that the biostatistics definitions differ, as biostatisticians refer to the population-average and subject-specific effects as "fixed" and "random" effects respectively. Often the same structure of model, which is usually a linear regression model, can be treated as any of the three types depending on the analyst's viewpoint, although there may be a natural choice in any given situation.
In panel data analysis, the term fixed effects estimator (also known as the within estimator) is used to refer to an estimator for the coefficients in the regression model. If we assume fixed effects, we impose time independent effects for each entity that are possibly correlated with the regressors.
Read more about Fixed Effects Model: Qualitative Description, Formal Description, Equality of Fixed Effects (FE) and First Differences (FD) Estimators When T=2, Hausman–Taylor Method, Testing FE Vs. RE, Steps in Fixed Effects Model For Sample Data
Famous quotes containing the words fixed, effects and/or model:
“... social evils are dangerously contagious. The fixed policy of persecution and injustice against a class of women who are weak and defenseless will be necessarily hurtful to the cause of all women.”
—Fannie Barrier Williams (1855–1944)
“Society’s double behavioral standard for women and for men is, in fact, a more effective deterrent than economic discrimination because it is more insidious, less tangible. Economic disadvantages involve ascertainable amounts, but the very nature of societal value judgments makes them harder to define, their effects harder to relate.”
—Anne Tucker (b. 1945)
“If the man who paints only the tree, or flower, or other surface he sees before him were an artist, the king of artists would be the photographer. It is for the artist to do something beyond this: in portrait painting to put on canvas something more than the face the model wears for that one day; to paint the man, in short, as well as his features.”
—James Mcneill Whistler (1834–1903)