I have panel data. When I use the Hausman test to decide on a fixed vs random model, I get an note saying that:
"the rank of the differenced variance matrix (8) does not equal the number of coefficients being tested (11)".
I am unsure what this means. I repeated this and converted my some of my factor and catagorical independent variables to simpler variables and scaled one variable to produce coefficients more similar to others which increased the rank to 9. Still, the note appeared as the rank, though improved, was unequal to the number of coefficients being tested. In all cases, the significant p value of the Hausman test indicated a fixed model.
I moved on to the xtoverid test. After running a random model (with and without the vce cluster option), there was an error message saying "saved RE estimates are degenerate (sigma_u=0) and equivalent to pooled OLS" implying I should use standard OLS regression.
Then I attempted the Mundlak approach - just for fun! The p value was not significant implying I should use a random model.
Any thoughts to which I should use and where I have gone would be very much appreciated!