About Fixed/Random Testing

[Du Jianwei]

hi,
I am Eviews 7 user and now I am doing a panel regression with this software. My data set includes 3 countries for 46 years(1963-2008). The form of my function is:
Y?=C+a*log(x1?)+b*log(x1?)^2+c*log(x1?)^3+d*log(x3?), the intercept "C" is expected to be cross section sepicfic.
My procedure goes like this:
Firstly, I run the "Unit root test". Since the result of this test show my data does not have a unit root, I turned to the next step of fixed/random effect model selection.Unfortunately, I encountered some problems in using the build-in function of Fixed/Random Testing.
There are two testing funcions for fixed/random selection,"Redundant Fixed Effects - Likelihood Ratio" and "Hausman Test for Correlated Random Effects", to perform the latter test, I need to estimate my model with your random effects specification.But once I select the "random" choice in Estimation method, Eviwes refuses to run estimation and the following warning has been given: "Random effect estimation requires number of cross section > number of coefs between estimator for estimate of RE innovation varaince". How can I solve this problem?
Thanks
Du

[EViews Glenn]

The problem is that the between estimator which is required for construction of the random effects estimator uses cross-section averages as data. Since you only have three cross sections, the between estimation has only three observations to estimate all of the parameters of your model.

You'll need to stick with the fixed effects estimator.