New answers tagged panel-data
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Assuming you have the aggregate data for seven countries and 10 years , running a OLS model with dummy variable is equivalent to the fixed effect. If you include dummy variables for countries (there will be six, one omitted to avoid dummy variable trap) or dummy variables for years (if there are 10 years , then there will be nine dummies, again to avoid ...
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Your emphasis is likely to be the wrong way round. Throwing away time as a variable is unlikely to be the best way forward.
You need to think hard about what is a panel. If you really want countries to be panels, then you may need to average or otherwise combine repeated observations for the same country and the same year.
But it sounds as if your panels ...
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In panel data context, "one-way" (or "individual") effects are individual-specific (but time-invariant) random variables.
"Two-ways" effects refer to the presence of both individual-specifit and time-specific variables.
See Baltagi B.H. (2008) 'Econometric Analysis of Panel Data', John Wiley & Sons, 4th edition, or any other microeconometrics textbook ...
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