Study on Fixed Effect versus Random Effects Modeling in a Panel Data Analysis; a Consideration of Economic and Political Indicators in Six African Countries

Individual heterogeneity can be controlled in panel data analysis to avoid bias in the final estimates. Panel data can be balanced or unbalanced, short or long panel. To identify the appropriate model, the fixed effects and random effects modelling approaches were applied to an economic data set, "Africa" in the R Amelia package. Both models were fitted to the data, taking into account the assumpt…