In the panel regression analysis of beer taxes on traffic deaths, the estimation period is 1982-1988 for the 48 contiguous U.S. states. To test for the significance of entity fixed effects, you should calculate the F-statistic and compare it to the critical value from your F_q_,_∞ distribution, where q equals A)48. B)54. C)7. D)47.

Question

Quizplus · Accepted Answer

The number of entities (states) in the estimation period is 48. The formula for calculating the degrees of freedom for entity fixed effects in a panel regression with T time periods and N entities is (N-1), and since the estimation period is 1982-1988, T= 7. Therefore, the degrees of freedom for entity fixed effects is (48-1) = 47.

In the Panel Regression Analysis of Beer Taxes on Traffic