Testing for individual effects in panel data

[christina.sakali]

Hi all,

After running the redundant fixed effects testing on EViews, both tests (F, LM (X2)) strongly reject the Ho that there are no individual effects in my data. However when I run the Hausman test in order to test which model is more appropriate for my data (fixed VS random effects) I get the following message: * Cross-section test variance is invalid. Hausman statistic set to zero.


I just wanted to know what it means, when EViews cannot calculate the Hausman statistic, is this due to the nature of my data or does it mean that the random model is not appropriate for my data? And should I try to calculate the Hausman statistic manually?

I have also read the answers to previous similar posts and cannot understand whether this means that the random effects model is not appropriate or whether it is not possible to make any inferences.

I would GREATLY appreciate any responses as I am currently preparing a paper for a conference and I have to justify the choice of my method

Thank you in advance!

[EViews Gareth]

http://www.google.com/#sclient=psy&hl=e ... e8c32f4f53

[christina.sakali]

Thank you Gareth.

[carmomi]

Dear Gareth,

Would it be possible to post the answer/google link again (the link is not working).

Many thanks
Miguel

[EViews Glenn]

http://www.google.com/#sclient=psy&hl=e ... _pw.&cad=b