yit = a + bXit + ci + eit
Using a fixed effect model, the constant term a cannot be estimated. a is collinear with ci. To break the collinearity, you need an additional restriction: xtreg, fe adds one restriction, reg another etc.. At the end, there's no way to separate a from ci.
My question is if this holds true also in a random effect model. In a RE we impose that the mean of all ci is equal to zero. Is this restriction sufficient to separately estimate a and ci or not? More in general what is the interpretation of the constant term in a random effect model (xtreg, re)?
Thanks
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