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Title:Fixed, random, or something in between? A variant of Hausman's specification test for panel data estimators PDF Logo
Authors:Frondel, Manuel
Vance, Colin
Issue Date:2010
Series/Report no.:Ruhr economic papers 160
Abstract:This paper proposes a variant of the classical HAUSMAN specification test commonly employed to decide whether the estimation of a random-effects model is a viable alternative to estimating fixed effects. Whereas the classical test probes the equality of fixed- and random effects, the proposed variant focuses on the equality of between-groups and fixed-effects coefficients. While both test procedures lead to the same conclusions, the panel model specification underlying our testing strategy facilitates the simultaneous estimation of the fixed- and between-groups effects. As a consequence, we are able to examine both the equality of the whole range of coefficients as well as that of individual variables. The usefulness of the test is illustrated using a panel of household travel data for Germany.
Subjects:Specification tests
fuel price elasticity
JEL:C12
ISBN:978-3-86788-179-1
Document Type:Working Paper
Appears in Collections:Ruhr Economic Papers, RWI
Publikationen von Forscherinnen und Forschern des RWI

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