Random effects(continued) Need to transform the model and do gls to solve the problem and make correct inferences o End up with a sort of weighted average of OLS and Fixed Effects -use quasi-demeaned data =1-g(2+7o2) yn-1=B0(1-)+B(xn-xn)+… +BK(k-xk+(v-v) Economics 20- Prof anderson 6Economics 20 - Prof. Anderson 6 Random Effects (continued) Need to transform the model and do GLS to solve the problem and make correct inferences End up with a sort of weighted average of OLS and Fixed Effects – use quasi-demeaned data  ( ) ( ) ( ) ( ) ( ) k itk i k i t i i t i i t i u u a x x y y x x T b    b  b      + − + − − = − + − + = − + 1 ... 1 0 1 1 1 1 2 2 2 2