The HPPANEL Procedure

Two-Way Fixed-Effects Model

The specification for the two-way fixed-effects model is

\[ u_{it}={\gamma }_{i}+{\alpha }_{t} + {\epsilon }_{it} \]

where the ${{\gamma }_{i}}$ and ${{\alpha }_{t}}$ are nonrandom parameters to be estimated.

If you do not specify the NOINT option (which suppresses the intercept) in the MODEL statement, the estimates for the fixed effects are reported under the restriction that ${{\gamma }_{N}=0}$ and ${{\alpha }_{T}=0}$. If you specify the NOINT option to suppress the intercept, only the restriction ${{\alpha }_{T}=0}$ is imposed.