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Two-Way Mean Group Estimators for Heterogeneous Panel Models with Fixed T

Xun Lu, Liangjun Su

arXiv 14 Aug 2025 · Econometrics · 1 citations (OpenAlex)

arXiv:2508.10302 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We consider a correlated random coefficient panel data model with two-way fixed effects and interactive fixed effects in a fixed T framework. We propose a two-way mean group (TW-MG) estimator for the expected value of the slope coefficient and propose a leave-one-out jackknife method for valid inference. We also consider a pooled estimator and provide a Hausman-type test for poolability. Simulations demonstrate the excellent performance of our estimators and inference methods in finite samples. We apply our new methods to two datasets to examine the relationship between health-care expenditure and income, and estimate a production function.

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40
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86
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Pesaran, M. H. and Smith, R (1995) Estimating long-run relationships from dynamic heterogeneous panels0.96911591%
2Pesaran, M. H (2006) Estimation and inference in large heterogeneous panels with a multifactor error structure0.92810480%
3Kapetanios, G., Serlenga, L., and Shin, Y (2023) Testing for correlation between the regressors and factor loadings in heterogeneous panels with interactive effects0.73732100%
4Häusler, E. and Luschgy, H (2015) Stable convergence and stable limit theorems, volume 740.65914429%
5Hsiao, C (2022) Analysis of Panel Data0.64422100%
6Hausman, J. A (1978) Specification tests in econometrics0.64422100%
7Lu, X. and Su, L (2023) Uniform inference in linear panel data models with two-dimensional heterogeneity self0.64422100%
8Pesaran, M. H. and Yang, L (2024) Trimmed mean group estimation of average effects in ultra short t panels under correlated heterogeneity0.64422100%
9van der Vaart, A. W. and Wellner, J. A (2023) Weak Convergence and Empirical Processes: With Applications to Statistics0.64422100%
10Westerlund, J. and Kaddoura, Y (2022) CCE in heterogenous fixed-t panels0.64422100%

Showing the top 10 of 40 scored citations.