random effects

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A panel data regression model in which it is assumed that unobserved heterogeneity is uncorrelated with the included variables. This unobserved heterogeneity is treated as a component of the disturbance term and can be group-specific (a single draw for each cross-sectional unit that enters the regression identically in each period) or time-specific (a single draw for each time period that enters the regression identically for every unit). See also fixed effects.

Subjects: Economics.

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