Hello,
This is my first post so forgive me if I explain anything wrong.
I am currently running a panel data and want to know whether to use Fixed Effects regression or a Random Effects regression, in order to do so I believe the Hausman test is the best possible way of doing this. From what I understand if the value of Prob>chi2 is above 0.05 then Random Effects should be used. However I get a value of 0.9375 which seems incredibly high, is there any explanation for this or am I doing something wrong?
Here is the code:
** Fixed Effects**
xtreg gincdif1 Immigrationfromforeigncountri RegionalDebtGDP1 UnemploymentRate lnRGDP, fe
estimates store fixed
** Now we run a Random Effects**
xtreg gincdif1 Immigrationfromforeigncountri RegionalDebtGDP1 UnemploymentRate lnRGDP, re
estimates store random
hausman fixed random
Many thanks,
Pepito
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