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Hyperbolic Transformation and Average Elasticity in the Framework of the Fixed Effects Logit Model
Faculty of Economics, Kyushu Sangyo University, Fukuoka, Japan
- 1 Faculty of Economics, Kyushu Sangyo University, Fukuoka, Japan
Theoretical Economics Letters·Volume 02 (2012)·Pages 192–199·Published 23 May 2012·DOI10.4236/tel.2012.22034
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Abstract
In this paper, a simple transformation is proposed for the fixed effects logit model, which constructs some valid moment conditions including the first-order condition for one of the conditional MLE proposed by Chamberlain (1980) [1]. Some Monte Carlo experiments are carried out for the GMM estimator based on the transformation. In addition, the average elasticity of the logit probability with respect to the exponential function of explanatory variable is proposed in the framework of the fixed effects logit model, which is computable without the fixed effects.
KeywordsFixed Effects LogitConditional Logit EstimatorHyperbolic TransformationMoment ConditionsGMMMonte Carlo ExperimentsAverage Elasticity
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