Intro to Mathematical Economics
A fixed effects model is a statistical technique used in econometrics that accounts for individual-specific characteristics when analyzing panel data. By controlling for these time-invariant traits, this model helps to isolate the impact of variables that change over time, allowing for more accurate estimates of causal relationships. It is especially useful when the unobserved characteristics are correlated with the independent variables, reducing omitted variable bias.
congrats on reading the definition of fixed effects model. now let's actually learn it.