Panel Data Models: Conditional Fixed Effects Estimators

A small number of fixed effects econometric models can be estimated by conditioning the fixed effects out of the model. These, which can all be fit with LIMDEP, are

• Linear regression (use group mean deviations)
• Binomial logit (condition on sum of outcomes)
• Poisson (condition on sum of outcomes)
• Negative binomial (conditional model is free of effects)

Note that Hausman et al’s negative binomial model is not a true fixed effects model in the fashion these are usually formulated, that is, in terms of an index function of the form a(i) + b’x(I,t). You can see this by trying to fit their model with its full set of dummy variables and an overall constant term - it works but it shouldn’t. The unconditional fixed effects model described in the section on the unconditional models is a true fixed effects model in that the effect acts to shift the mean.
LIMDEP computes conditional maximum likelihood estimates of all these models.