cross section and period fixed effects

[vasco1966]

Hi:

I have a panel data set for 10 countries and for a time period ranging from 2000 to 2010. I have chosen fixed effects as the appropriate methodology. My questions are these:

1. What is the difference between period and cross-section effects? I presume that cross section refers to the dummy utilized to differentiate the 10 countries and period effects to differentiate between the different years. Is that correct?

2. I am unable to run regressions with both period and cross section effects. I get 'near singular matrix' every time I try. I am able to run period fixed effects however. What are the consequences of this? How can I justify running only period fixed effects?

3. I presume the reason why I am unable to run both cross section and period effects is because of insufficient degrees of freedom. Can anyone provide me with the correct interpretation and appropriate literature on the subject?

Thank you