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xtreg y x1 x2, fe est store fe xtreg y x1 x2, re est store re hausman fe re, sigmamore The test was significant. Which meant FE model is applicable. However, since the results were not consistent with the literature, I carried out the following diagnostic tests: xtreg y x1 x2, fe xttest2 (For cross sectional dependence) xttest3 (For heteroscedasticity) xtserial y x1 x2 The model had all 3 problems. To remove the problem I applied the xtgls command, i.e., xtgls y x1 x2, panels(hetero) corr(ar1)
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