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I'm estimating a Random Effects model with an AR(1) disturbance for the errors (xtregar in Stata). The reported results show that the constant (in Stata terminology) is positive and significant.

The question is, in general terms, how do you interpret this constant term?

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The constant term is usually not of much interest (although it depends on the particular situation and whether variables are centered and so on). It is the estimate of the dependent variable when all the independent variables are 0.

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  • $\begingroup$ So, in that sense, it's the same interpretation as for any normal OLS estimation? $\endgroup$ Aug 18, 2013 at 13:13
  • $\begingroup$ Yes, that's right. $\endgroup$
    – Peter Flom
    Aug 18, 2013 at 13:14

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