Question

\text { 2. Consider the panel regression equation } Y_{t}=\beta X_{t}+\alpha_{1}+\lambda_{t}+u_{t-} \text { [7 marks] } a) Describe in words what a¡ represents. \text { b) Describe in words what } \lambda_{t} \text { represents. } c) Suppose there are only two time periods, i.e., T=2. Describe three ways to estimate this regression in Stat a that will provide the same estimate of ß. Please provide your code for each way. Assume the following variable names: y for the dependent variable, x for the explanatory variable, id for the entity, and time for the time. [3 marks] d) Continue to assume that T=2. Would you expect the R² to be the same across the three methods you described in 2c)? Does this imply anything about which method is preferred? Explain your answer. [3 marks]

Question image 1Question image 2Question image 3Question image 4Question image 5