FANDOM


Requires strict exogeneity $ E[u_{it}|x_{i},c_{i}]=0 \, t=1,...T $. Intuitively, this is because every $ y_{it}, x_{it} $ needs to be demeaned (the within transformation) - since the mean depends on past, current and future values, we need that $ u_{it} $ is uncorrelated with all $ t $.

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