Appendix J

Random Intercept Model

(Sources: Cameron and Trivedi [1], Hsiao [2])

The random effects model can be written as

(J.1) equation

or

(J.2) equation

where img. The variance–covariance matrix of img is

(J.3) equation

Its inverse is

(J.4) equation

The individual-specific effects img are assumed to be realizations of i.i.d. random variables with distribution img and the error img is i.i.d. img. The model can be re-expressed as img, where the error ...

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