Identifying Fixed-effects Models with Heterogeneous Coefficients

Wooyong Lee

Economics Discipline Group, UTS Business School, University of Technology Sydney; address: 14-28 Ultimo Road, Ultimo, NSW 2007, Australia, Tel: (02) 9514 3074 wooyong.lee.econ@gmail.com

JEL Classification: C23

Abstract

This review provides an introduction to identification and estimation methods for fixed-effects models with heterogeneous coefficients, which require identification strategies that are notably different from those for standard fixed-effects models. The strategies imply consistent estimation methods for the parameters of interest, which are also different from those used in standard fixed-effects models. As an introductory review, this work defers detailed implementation procedures for the estimation methods to future studies.

Keywords:

Fixed effects, Difference-in-differences models, Panel data models, Unobserved heterogeneity

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