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Fixed-Effects Vector Decomposition: Properties, Reliability, and Instruments

  • Thomas Plümper (a1) and Vera E. Troeger (a1)
Abstract

This article reinforces our 2007 Political Analysis publication in demonstrating that the fixed-effects vector decomposition (FEVD) procedure outperforms any other estimator in estimating models that suffer from the simultaneous presence of time-varying variables correlated with unobserved unit effects and time-invariant variables. We compare the finite-sample properties of FEVD not only to the Hausman-Taylor estimator but also to the pretest estimator and the shrinkage estimator suggested by Breusch, Ward, Nguyen and Kompas (BWNK), and Greene in this symposium. Moreover, we correct the discussion of Greene and BWNK of FEVD's asymptotic and finite-sample properties.

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e-mail: tpluem@essex.ac.uk (corresponding author)
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Authors' note: Supplementary materials for this article are available on the Political Analysis Web site.

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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

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Political Analysis
  • ISSN: 1047-1987
  • EISSN: 1476-4989
  • URL: /core/journals/political-analysis
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